An Investigation of Scenarios for the
Date
2011-05-30
Authors
Mpofu, Patience
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Abstract
The platinum-mining industry is predominantly located in South Africa, which is
home to more than 78 % of the world’s Platinum Group Metals (PGMs). The
industry has been growing extremely fast but has recently faced several
challenges. High platinum prices in 2008 meant that the industry had an average
return on capital of ±34 % for three to four years. This was driven by the
increasing demand for PGMs, which have a wide range of industrial and hightechnology
applications with an important and growing impact on our daily lives.
Platinum, palladium and rhodium are mainly used as a component of
autocatalysts for both petrol- and diesel-engine vehicles, which together are
responsible for more than 76% of net total PGM consumption. However, over the
past two years, this industry has faced many challenges resulting in a significant
reduction in demand for these PGMs, thereby creating many uncertainties
regarding the future of the industry. The economic crisis during 2008 hurt the
platinum price. It plummeted from ±US$2 200 per ounce in mid-July 2008 to
approximately US$800 per ounce in late 2009, leaving some platinum mines
temporarily closed.
As a result, platinum mining companies need to expand their knowledge regarding
future opportunities and threats that may cause a dramatic fall or rise in the
demand and supply of platinum. There is still a gap in knowledge as to how to
identify the key uncertainties affecting the overall platinum industry. This research
report seeks to unravel these key uncertainties. Therefore, the aim of this
research is to explore the key uncertainties in the platinum-mining industry that
may affect it in the next 10–15 years, and to suggest plausible future scenarios for
the industry.
In recent years, strategic foresight has remained the biggest challenge associated
with platinum-mining companies. Therefore, an analysis and understanding of the
current and prospective status of platinum demand within South Africa and
worldwide, its supply, industry trends, and key role players are critical ingredients
in anticipating the future of the platinum industry. The research analysis was
ii
therefore used to question the strategic paradigms, and to offer possible future
scenarios, but not to forecast the future.
The methodology used for this study is qualitative in nature. The beliefs and
thoughts of industry experts were elicited through a structured analysis of the key
uncertainties identified by them regarding the platinum industry to arrive at the key
ones. The respondents nominated were initially contacted by e-mail and
telephone to inform them of the purpose of the study and the subjects to be
covered, and to invite them to participate in the research process, including the
expected timeline of the review. Upon acceptance, the draft report, with an openstructured
questionnaire, was sent to the respondents by e-mail. The responses
were then collated and analysed for thematic content to distil a number of key
uncertainties. The key driving forces were then identified through Causal Loop
Analysis (CLA) and used to posit four plausible scenarios.
The research findings showed that the two critical driving forces that defined the
four scenarios were identified as, first, Global Economic Performance (GEP), that
is, the performance of platinum in the global arena, and second, Emissions
Legislation (EL). This legislation will be driven primarily by global warming, which
will necessitate the need for more efficiency in energy use. The subsequent
strategic scenarios of the platinum-mining industry were given the following
names:
Scenario 1: Sunshine Forever
Scenario 2: Perfect Storm
Scenario 3: Tsunami , and
Scenario 4: Tornado
These scenarios provide a perspective of what the platinum-mining industry may
have to face within the next 10 to 15 years. The scenarios confirmed that an
industry is exposed to a turbulent environment when its environment is dynamic,
unpredictable, and driven by continuous societal and technological change.
Therefore, platinum-mining industries need to use sign-posting to plan and
strategise for times of turbulence.
Description
MBA - WBS
Keywords
Platinum industry, Strategic planning