The strength of the rand is set to continue to cause problems for platinum producers in South Africa according to new analysis.

Industry observers have warned that the currency may well have a direct impact on production, as the bullish rand threatens new projects and is making other unprofitable.

Speaking to Reuters, an unnamed analyst said the next three years were likely to prove crucial in determining how the rand would affect the mining industry.

"It could start turning ugly, we could very easily have a market that tightens up quite quickly in 2007 and 2008," he commented.

"The problem is the lead time in these projects, it's a four-year lead time for a big mine. There's a lag in terms of how quickly supply can adjust to changes in market conditions."

Platinum heavyweight Angloplat moved to cut its output when announcing its results recently, with other potential supply restrictions reshaping South Africa's output, as Absa analyst Hilton Ashton explained.

"With Angloplat having scaled down its estimates again, one would have to cut forecasts by ten per cent or 15 per cent going forward," he commented.

"You're talking about scaling back around 500,000-800,000 ounces for South Africa as a whole by 2008."

Predictions for the trajectory of the rand remain difficult, with recent forecasts proving wide of the mark.

Nevertheless, all analysts agree that if the rand does continue to surge platinum projects will undoubtedly suffer.