Robin Bromby | September 07, 2009 Article from: The Australian
STRONG gains are now being predicted for platinum prices in the second half of 2010 - just the sort of timing you would like if you`re getting closer to making a mining decision on a new project.
Which is a double dose of good news for Magma Metals, the company this morning announcing that it has 690,000 ounces of platinum equivalent at its Thunder Bay North project in Canada (that resource figure including palladium, copper and nickel credits). Broken down into contained metal, that means there’s 624,000oz of platinum and palladium, 24,250 tonnes of copper and 16,800 tonnes of nickel.
This development coincides with a pretty bullish outlook on platinum in a report just out from the London office of BNP Paribas. The team there expects the metal’s price to ebb over the rest of this year, though growing investment demand should mitigate falling purchases by the industrial sector.
But platinum will be caught in a pincer in 2010, says BNP. There will be rebounding industrial demand in the second half of next year but constrained mine output. The use of platinum in automobiles will be boosted by schemes in the US to scrap old cars and pick-ups (the so called “cash for clunkers” program just ended) which is expected to generate demand for an additional 750,000 new cars. Germany, France, the UK, Italy and Spain have had some form of old vehicle scrapping schemes, and China is subsidising the purchase by farmers of small cars. Platinum, of course, is used in catalytic converters that limit air pollution from vehicles - and the business is big in Europe particularly where the majority of cars are fuelled by diesel.
BNP sees ongoing problems in maintaining platinum production out of South Africa, partly because of the potential power shortages- although they promise continuous electricity while the World Cup is on. But that is not enough of an assurance to those contemplating pouring millions of dollars into new platinum mines.
MMB Price at posting:
77.0¢ Sentiment: LT Buy Disclosure: Held
