ANALYSIS: Platinum miners loath to take lead on output cuts

By Agnieszka Flak and Jan Harvey

JOHANNESBURG/LONDON (Reuters) - Profit prospects are poor for South Africa's platinum miners as they collectively hold back from making the deep production cuts necessary to reduce a market surplus and force higher prices.

They have felt some respite this year from the tightening margins that have plagued them since the financial crisis hit in 2008, with platinum rising 24 percent, chiefly on the back of a violent strike at Impala Platinum's Rustenburg mine.

But prices remain some $600 below 2008's record $2,290 an ounce, at an historically unprecedented discount to gold and well below the level miners say they need for future growth as they face an appreciating rand and fast-rising production costs.

They may have to consider cutting production further and focusing on improving margins of their best-performing assets. But this is a move they are unlikely to make.

A pan-industry production cut would benefit prices and the platinum mining sector as a whole, but it would take a brave miner to be first to cut output in a bid to raise prices.

"If one cuts, obviously they would suffer, because they will not produce those ounces, their cost of production will rise and the other miners benefit," said Standard Bank analyst Walter de Wet. "That's why it's difficult to say if they would cut."

Aquarius Platinum said it would optimise its Everest mine, but any significant and deliberate output cuts have yet to be announced.

"Aquarius has announced that its Everest mine is on an optimisation programme, Impala obviously has a strike at the moment, which will certainly pull ounces out of the system," said Justin Froneman, an analyst at SBG Securities.