Global platinum shortage when corona epidemic hits South Africa?

Seventy percent of the world’s platinum supply comes from South African mines.

Will the coronavirus force a full shutdown of SA’s mines?

  • As of today, 23 March 2020, SA is the country in Africa with the most confirmed coronavirus cases; 402, up by 128 in one day.
  • Almost one in five South Africans are infected with HIV. That’s seven million people. Sixty percent of these also suffer from tuberculosis.
  • Nearly one in four South Africans live in slum conditions.

These three points, I’m afraid, are sufficient to predict the coronavirus hitting SA very hard.

It will happen, and it will happen fast.

The confirmed cases are 402. The real number, if I dare pick a number, may be 5000 already. If the cases double every 3 days the number of cases will be:

  • 10,000 on Mar 26
  • 20,000 on Mar 29
  • 40,000 on Apr 1
  • 80,000 on Apr 4
  • 160,000 on Apr 7
  • 320,000 on Apr 10
  • 640,000 on Apr 13
  • More than a million by April 16

Even it won’t grow this fast, we all know how quickly everything escalated in Italy. Now with almost 800 dead in one day, Italy is on a complete shutdown.

In the case of Italy, mostly very old people die, but in SA co-infections with HIV and TB may lead to significant death tolls for all age groups. How can society not come to a standstill also in SA?

The mines are, even under normal conditions, suffering from social unrest and strikes. I cannot see how they can manage to keep the miners shielded from the virus during this epidemic. It will be impossible to keep the mines open.

Platinum

The demand for platinum should continue to suffer from the global economy in crisis. Half of all platinum goes to autocatalysts. As the car market slows significantly, so does the demand for platinum. On the other hand, assuming a currency crisis where gold is the big winner, hoarding of platinum bullion and jewelry should offset some of the losses in industrial demand.

What makes platinum special is the supply. It will fall by 70% as SA shuts its mines – which is likely to happen in a few weeks already.

Now if the demand falls by, pick a number, 20, 30, 50%, the drop in global supply is even larger. Thus the platinum shortage.

Needless to say, I hope I am wrong.

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1 reply

  1. At the very moment I wrote this post, the SA government decided to put the country on a lockdown. I read these news after I posted. Hopefully this will save the country from this horrible virus.
    For platinum this means full mining stop for at least three weeks, i.e. global shortage.