Wednesday, 23rd February 2005 (2999 views)

South African precious metal producers are likely to see their margins threatened and output squeezed in 2005, as a number of projects come under pressure from the strength of the rand.

The growing strength of the rand has prompted industry observers to place question marks over a number of projects in the region, although some good news has been signalled from China.

The rand has doubled in value against the dollar in the last four years, damaging the gold sector as the Treasury acknowledged in its 2005 Budget Review.

"Certain sub-sectors, such as electrical machinery, furniture, and gold mining have not managed the competitive pressure of a strong rand,' the Treasury declared, according to reports on Bloomberg.

Anglo American released its results today, corroborating the impression that the rand could pose more difficulties in 2005.

However, finance director Tony Lea said that he expected commodity prices to remain steady, largely as result of the impact China is having on the market.

The region's rapid consumer growth has helped spur a number of industries, with both the gold and platinum sectors reaping the benefits of the world's fastest growing economy.

 

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