I have written about ESKOM, the troubled South African utility, in numerous blogs and in my eBook. Here's a quote from South African President, Cyril Ramaphosa, as reported by Fin24's newsletter:
"We will overcome this electricity crisis engulfing the country at this moment. We will overcome it, just as we overcame the apartheid challenge."
My reaction? By elevating this crisis to an equivalence to apartheid, whose end is the fundamental raison d'etre driving South Africa today, Ramaphosa is truly underscoring the seriousness of this situation. I don't think the Platinum market, where over 70% of the world's supply comes from South Africa, is truly paying attention to the risk inherent in a deeply troubled utility, and the implications for PGM mining production.
As I have noted, the mining industry is fundamental to South Africa, and I expect that if anyone gets power, it will be this industry, since mining is the life blood of the country. That is probably how it shakes out, and this issue will be real, but perhaps on the margin.
On the other hand, isn't managing the economy, with a focus on the disenfranchised, an important and driving focus of the governing ANC? Can the African National Congress truly afford to have electricity off in the cities for the benefit of the mining companies? Again, I am expecting this issue will somehow be managed, though I also don't see a resolution to the continued deterioration of the power supply.
It does all underscore vulnerability to Platinum supply, and the strong position of Russia with its huge Palladium and PGM in the ground inventories, which certainly should be factored into the thinking of the world's investors.