December 12, 2011 / 11:39 AM / 8 years ago

UPDATE 2-S.Africa platinum sector hit by safety stoppages

* Mines minister has said industry inspections to rise

* Platinum production down sharply in October (Recasts background, details)

By Ed Stoddard

JOHANNESBURG, Dec 12 (Reuters) - Northam Platinum , one of South Africa’s smaller platinum producers, said on Monday its only producing mine has been hit by several stoppages due to government safety inspections, part of a wider campaign that has hit the sector.

Analysts have speculated that a sharp fall in overall platinum production in South Africa in October was the result of increased stoppages related to surprise inspections as part of a government drive to boost safety.

“Northam’s Zondereinde mine has, for a number of months, been the subject of unannounced inspections from the DMR’s safety inspectorate,” Marion Brower, a spokesperson for Northam, said.

“These have frequently resulted in DMR-enforced safety stoppages in certain sections of the mine,” she said in an e-mailed response to questions from Reuters.

Mines minister Susan Shabangu said in November her Department of Mineral Resources (DMR) would be increasing health and safety audits of mines in the face of a “culture of non-compliance”.

Northam did not say how many ounces it had lost in output from the stoppages.

Platinum group metals production (PGMS) in South Africa, the world’s largest supplier of the precious metals, fell by over 36 percent in October from September, a slide attributed to an increase in safety inspections and stoppages.

Impala Platinum (Implats), the world’s second largest platinum producer, has said it lost 8,000 ounces of output in October through having to issue Section 54 notices, referring to government orders to halt mining activity for I


JP Morgan Cazenove called October’s fall in output “an unprecedented slump” and attributed it to a jump in Section 54-related disruptions in a research note last week.

“The potential impact of ongoing disruptions of this nature must not be underestimated. The impact on mine profitability would be profound,” the note said.

The drop was the highest percentage drop in October in recent years according to Statistics South Africa data though output does usually fall in October. In October 2010, PGMS output in fell almost 22 percent.

Graphic on S.African Oct platinum output 2004-2011:

South Africa’s gold sector has more fatalaties and deeper mines than platinum but there have been no reports of gold miners being subjected to surprise inspections.

Yet Gold Fields, the world’s third largest gold miner, said it was about to be audited.

“We have been informed that we will be audited and the process will start next week and continue into January,” spokesman Sven Lunsche said.

Officials at the department of mineral resources could not immediately be reached for comment.

Gold production in October fell 3.3 year on year versus a 27.3 percent fall for platinum. (Reporting by Ed Stoddard; editing by Jason Neely)

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