Changes to legislation in South Africa governing inflation and macro-economic stability have enabled the platinum industry to be better equipped to meet changing levels of global demand, according to an industry expert.

Eric Lonergan, a global strategist for Cazenove, characterises the South African platinum industry as 'typically a boom and bust' sector, essentially due to the time it takes for production levels to respond to hikes in demand.

'Particularly in the mining industry', he said according to Johannesburg's 'Moneyweek', 'particularly nowadays with, for example, environmental hurdles which have to be gone through, it takes an awful long time [to augment production].'

'And it can take decades if it actually requires exploration. I mean, if you don't have the proven reserves or deposits, you then have to embark on that process.
However, alluding to the current popularity of platinum in China, Mr Cazenove went on to explain that he believed the industry had now come to terms with the often erratic patterns of demand in the pgm sector - and that the 'fruits of what has been very considerable reforms within South Africa' would now be seen.
'After a 20-year experience of falling prices, the industry has never managed its capital base in a more disciplined fashion,' he noted.

'There is still an awful lot of value from a global perspective in mining stocks and resource stocks', he continued, looking to the future, and voiced confidence that the rand - a bugbear for miners recently - would soon stabilise.

'I think South African inflation and interest rates are going to normalise with respect to the rest of the world, and that will dramatically reduce currency volatility.'

Lonergan believes Chinese demand is built on a domestic desire for consumer products rather than any industrial need for the precious metal - a huge boon for both China and South Africa considering the country accounts for around 65 per cent of global growth in platinum demand.