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Chinese company prepares for platinum boom

Pyramid of platinum ingots

The precious metals market has taken a beating recently however this trend hasn’t scared off Chinese mining investment. In addition to their deals with mines in Mongolia and Chile, a Chinese mining company has now moved into the South African platinum market. In spite of the market uncertainty, the acquisition still poses big opportunities. The Asian Times reports:

One of China’s largest mining companies has dipped its toes into South Africa’s platinum sector, at a time when the industry is in its worst crisis in years.

China’s Gansu-based Jinchuan Group’s acquisition of Wesizwe, a South African company that is developing one of the richest platinum deposits in the world, opens the possibility of further Chinese investment in a sector that up to now has been dominated by a handful of South African and Western commodities companies.

South Africa has about 80% of the globe’s platinum. The commodity is ranked as a precious metal, along with gold, and can be used in a variety of industrial applications…

However, platinum miners are currently in a crisis as they battle to overcome rising costs. Demand has dropped as car sales in debt-crisis hit Europe have fallen, where tight environmental regulations mean all fossil-fuel powered vehicles must have a platinum-based catalytic converter.

“Most of us were shaking our heads when this deal was announced,” said Peter Major, a mining analyst at Cadiz, an asset management firm in Johannesburg that specializes in Sino-Africa investments.

Not only are the market conditions the worst they have been since before the commodities boom began a decade ago, the commitment needed to bring a new mine to production is substantial, even in good times. The mine will be nearly a kilometer underground, a technical feat unlike the open-pit or shallow-level operations to which Chinese operators are more accustomed.

Continue to the full article…

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