Perhaps slightly glossed over in the various reports and comments on the short to medium term future of the platinum price, and the power problems being faced by the South African mines which produce the vast bulk of the world's new mined supply is that of refrigeration.  No this is not some esoteric new use for platinum catalysts, but an absolute necessity for the deeper platinum mining operations - and the world's two largest producers, Anglo Platinum and Implats are both fast approaching mining depths where refrigeration of the intake air into the mines will be an absolute necessity to maintain safe working conditions and production.

As an example of the amount of power needed for this, Northam Platinum, which is already deep enough to require intake air refrigeration, uses around 40 percent of its power allocation just to keep the refrigeration systems running.  If Eskom, South Africa's power utility, remains insistent on restricting mining operations to 90 or 95 percent of current power levels, then Angloplats and Implats will both be unable to run their own refrigeration plants on grid power and may thus be unable to mine the deeper levels now being accessed, without some form of additional power.  If the Eskom power crisis continues to 2015 or beyond, as some observers feel may well be likely then the platinum majors will either need to commission expensive to run alternate power supplies, or cut production.

As we pointed out here earlier, the spate of serious new platinum miners on South Africa's Bushveld Complex, the source of nearly 80 percent of the world's platinum supplies, are all having to rethink their economics to incorporate self-generated power into their capital and operating costs and this could lead to delays, and also the failure of the weaker projects economically which will all have an impact on projected future supplies.

Few of the new projects have a firm agreement in place with Eskom over security of grid power supply - and even any which do, as Platinum Australia apparently has with its Smoky Hills development - cannot be certain that the power utility will not renege on its agreement as it has already done with some of the country's power hungry aluminium smelter projects.

The major possibility for increased platinum output elsewhere is, of course, the economically chaotic Zimbabwe where the domestic power supply situation is perhaps even worse than that in South Africa and where shortages of plant and spares as well as power means mines struggle to keep going in any case.

Add to this the speculative element which can tie up supplies in ETFs which could be going for industrial usage and some of the forward price projections for the metal  currently being seen could be conservative in the extreme.  Big increases in price will accelerate substitution likelihood and this could mean that in the short and medium term prices stay very high - or even increase substantially - while in the longer term as substitution begins to take effect, the demand could fall leaving the producers with excess output and less robust economics.  But this would be some way away yet.