To be clear, I am not bashing PLG, in fact it I hope it makes a fortune. I am commenting here on the PGM market in SoAf in general.
Asked for comments on their prospective markets, MiningMx talked to various CEOs representing differing sectors. Here's what Stuart Murray, CEO of Sylvania Resources (and ex-CEO of Aquarius Platinum) had to say about 2014 for the PGM miners:
Stuart Murray, chairman, Sylvania Resources
“Between 70% to 90% has been lost in the platinum sector in the last five years; it’s a pretty awful place to be. Cash costs are up 65% in five years; operating margins are gone from 45% to nil.
“You have to look at management: did they protect margins or shareholders? I think they did pretty damn little. There’s been a lot of cross-subsidisation where good metal has been used to subsidise bad metal. Now there is no low cost production in South Africa.
“Management has to find a way of balancing supply and demand as well as sensibly deploy capital. There’s also a fear that the platinum ETF – which has sucked in R11bn in local money at the expense of platinum equities – is creating a situation of significant above-ground inventories”.
There’s not a crumb of comfort in Murray’s assessment. Murray’s critique is that the platinum sector followed a path of irresponsible, unstinting growth at the expense of shareholders.
As the CEO of Aquarius Platinum for nearly 12 years until he quit in October 2012, he was parsimonious with funds and therefore feels as if the major mining companies have mucked up the market for everyone else. In short, supply has to fall to allow a deficit, and upward price pressure, to return.
His view is a painful restructuring of the platinum industry has still to occur before it can seriously tempt investors back.