TigerSoft News Service 2/24/2008 www.tigersoft.com
See also Blog 10/7/2007 Trading Food Commodities
PLATINUM And South Africa's Power Outages
by William Schmidt, Ph.D. (Columbia University)
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Example of historical research NEM - Newmont Mining. Order Here.
This chart would have looked to very bullish last September to any experienced TigerSoft user.
It shows the need to scrutinize continually all investment vehicles with Tiger's Power-Ranker.
The October 2007 advance coincided with Blackouts at that time.
PLATINUM and South Africa's Power Outages
The success of the Gold and Silver exchange-traded funds has naturally led to speculation
that a platinum ETF is coming. There certainly would be a lot of investor interest in it. Platinum
has risen more than 50% in the last month. Industrial demand keeps growing, but production has
slowed recently as 79% of it comes from South Africa, where power outages have closed mines.
90% of it is used by the automobile industry for its catalytic converters. The automobile
industry and environmentalists will certainly fight anything which will reduce further the supply of
platinum. as a platinum ETF would.
Platinum is very scarce. Only 118 tons of platinum were produced last year. This 1/16 as
much as the annual producti0on of Gold and 1/100 as much as the amount of new silver each
year. It takes about 10 tons of copper or nickel ore - mostly extracted at depths of a mile or more
down and at temperatures above 120 degrees F.- just to produce one pure troy ounce of Platinum.
The shortage now is further complicated by the fact that it takes six to nine months for the platinum
to finish processing after it comes out of the ground.
Experts say global platinum demand could outstrip supply by 400,000 to 500,000oz in 2008,
compared with a supply shortfall of about 265,000oz in 2007. The market had a surplus of 65,000oz in
2006, following seven successive years of deficits. Top producer Anglo Platinum
of world supplies, has said power problems would cut output by 120,000oz in 2008, while number 2 Impala
a day because of the outage.
( Source: http://www.mining-journal.com/Breaking_News.aspx?breaking_news_article_id=4444 )
South Africa Has Serious Power Problems That Will Not Be Solved Quickly
A month ago the Associated Press reported that South African gold, diamond and platinum
mines were shot down because of "unprecedented, unplanned power outages". Mining companies
like AngloGold Ashanti, Harmony Gold Mining and Gold Fields suspended underground operations
for fear that power outages could stop miners underground and the cooling systems will fail.
The power was still off on February 6 and all the platinum mines were shut down. ESKOM,
South Africa's privatized electicity utility has not given a date when mining operations
can be resumed or if it will be able to guarantee a sustained supply of the electricity needed
by the country.
(Source: http://www.theglobalalliance.org/South-African-power-crisis-life-threatening-200801173319.html )
A failure from ESKOM's aging (1976) and outdated nuclear power generator at Koesberg is
blamed by some. One blogger wrote:that there may have been a serious accident at an old
South African nuclear installation at the remote town of Potadder.
( http://everything2.com/index.pl?node_id=1795551 It should be mentioned that a South African
minister blamed sabotage at the Eskom nuclear reactor at Koeberg.
On February 13th, one observer wrote with alarm about the emmergency.
It is not only that ESKOM have not maintained or expanded their operations in the last 15 years,
but the next big whammy is that there is no coal to keep the power stations running at most times,
there is a couple of months supply of coal onsite for electricity operations, today there is hardly
a few days supply. Incidentally the reason given for this catastrophe is that the trucks delivering
the coal have been unable to get to the power stations as the road infrastructure has deteriorated-
potholes again. In the Afrikaans language: slaggate - a direct translation to slaughter holes. ..
At some point the effect of the power emergency on water and sanitation supply should be
considered and this would be part of the roll out of unexpected events resultant of the collapse of
the power supply, but the water board have usurped the power supply with homegrown problems
of their own
So here we have it, 43% of the dams have safety problems and are in danger of collapsing.
Further to this, the ground water in Gauteng, the province of Johannesburg, has radioactive
contamination from mining operations...
The first reaction to the power emergency took the form of a rush for candles, refilling of gas
bottles and the purchasing of generators (if you could get them). Then the complacency set it,
business learnt to sit through power outages, retail shops were forced to close their doors for a few
hours a day. There was and is a shortage of food supplies, food went bad in the fridges and had to
been thrown away. It was kind of charming in a strange kind of way, to eat dinner by candle light
and forgo the soapies on TV. Traffic lights were out over a large number of suburbs and delays
in getting to business meetings became the norm...The schools are unable to teach a full days lesson.
The internet service providers and the mobile phone companies frequently have service delays or are
just plain off line. The battery runs out on your laptop and thats the days productive work is over
until the power is back on Patients in ICU or undergoing operations, as the power grid went down,
were at risk of and did, die. (Source: http://www.bitsofnews.com/content/view/7234/ )
LATEST UPDATE ON POWER OUTAGES IN SOUTH AFRICA
On February 20th, it was reported that South African mines are now getting 90% of their
normal supply. This situation is expected to last for the next four years. It will take that long until
new power plants can be brought on line. With rolling blackouts and mines not getting all
the power they need, this will substantially reduce the deeper mine's pruduction of platinum and gold.
( Source: http://portal.gci.net/news/read.php?id=15937952&ps=1014&lang=en&_LT=HOME_BUNWC01L3_UNEWS )
Judging from the ETF for Soth Africa, it appears the worst of the crisis may be over. As the weather
gets cooler there will be less electricity demand.
SWC - Stillwater Mining -
Stillwater Mining Company engages in the development, extraction, processing, refining, and marketing
of palladium, platinum, and associated metals in Montana, the United States. The company's mining operations
consist of the Stillwater Mine located on the J-M Reef in Nye, Montana; the East Boulder Mine located at the | western end of the J-M Reef in Sweet Grass County, Montana; and a smelter and base metal refinery located in
Columbus, Montana. As of December 31, 2006, it had proven and probable ore reserves of approximately 42.4
million tons with an average grade of 0.54 ounce of platinum group metals per ton, containing approximately
23.0 million ounces of palladium plus platinum.
Stillwater Mining Company Earnings Call scheduled for Tue, Feb 26