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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This Is The Newest Thing in Platinum

I haven't written much about one of the biggest events going on in mining right now.

The protracted strikes that have crippled South Africa's platinum sector.

Mostly because it's old news. I've been talking since 2010 about the likelihood of a platinum crisis. And now that it's come to pass, the situation is fairly straightforward.

To wit, the platinum market is in serious trouble.

The metal is one of the most geographically concentrated of any major commodity. With South Africa accounting for 73% of global supply.

Which means that the current problems in the country are a big deal.

We haven't seen much response in the platinum price yet. With analysts variously pointing to above-ground supplies held by producers or perhaps end users as the reason for the muted gains.

But beyond prices, there's a more subtle response happening in the industry. The sector is starting to look for alternate sources of supply.

One such option emerged last week. With producer Jubilee Platinum announcing it will look to mine tailings.

The firm said it has struck a deal with Dikolong Chrome Mines to reprocess platinum-bearing tailings from the Dikolong's South African chromite mining operations. Jubilee will now construct a plant to extract platinum group metals here.

The project could be a significant producer. With planned yearly capacity to process at least 180,000 tonnes of tailings. Total resource at the site is currently estimated at 800,000 tonnes--with an additional 8,000 to 12,000 tonnes being deposited monthly from mining operations.

We'll see if the project is ultimately successful. But at the very least, it shows that the platinum world is looking for new answers.

This bodes well for exploration in the sector. With dollars likely now coming available for well-conceived greenfields projects. The market simply can't afford to wait until the next disruption comes in this sensitive space.

We'll see if supply even survives the current crisis unscathed.

Here's to a platinum opportunity,

By Dave Forest


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