“Your comments yesterday on Platinum and it's ratio to the gold price may well prove to be timely. Only this morning in many South African newspapers [where I have now retired] there comes a warning of rolling power cuts by the state power utility Eskom. This has come about apparently for two reasons. Much more time having to be spent on maintenance coupled with an ever expanding demand for power. This country is the classic example of not having forward planning regarding investment in infrastructure.

“Two new coal fired power stations will not be due on stream until 2015 and 2017, and I suspect the way things are going they will not be commissioned on time. Public debate on nuclear here is very much skewed against the idea unfortunately."

Eoin Treacy's view Thank you for this informative email. This article from Bloomberg by Carli Lourens carries some additional detail. Here is a section:

Eskom is building new coal-fired power plants and restarted inactive ones to avoid a repeat of the January 2008 blackouts that temporarily shut mines and halted work in factories in Africa's largest economy. BHP Billiton Ltd., Xstrata Plc and Anglo American Plc's aluminum, ferrochrome and platinum smelters are among the largest electricity users.

While Eskom isn't planning a repeat of 2008 forced rolling power cuts now, it's asking large customers to voluntarily reduce usage, as it has done at times over the past year, Joffe said. Eskom is also using its more expensive gas-fired plants now to generate electricity, she said.

A shortage of coal, the fuel used to fire most of Eskom's power plants, contributed to the 2008 blackouts. The South African Weather Service forecasts an at least 30 percent chance of rain for Witbank, the heart of South Africa's main coal- production region, for each of the six days from today, it said on its website.

The South African power cuts in early 2008 had a dramatic effect on platinum prices, not least because the country dominates global supply. Prices accelerated to an historic peak near $2300, subsequently lost momentum, broke back below the 200-day MA in July 2008 and collapsed during the credit crisis to a low near $750.

Platinum rallied impressively during 2009 and the first half of 2010 but lost momentum following a test of the $1800 level. Prices broke back below the 200-day MA in September 2011 and encountered resistance in the region of this trend mean in November. The metal currently appears to be unwinding an oversold condition relative to the MA so the short-term upside can probably be given the benefit of the doubt. A sustained move above $1600 would break the progression of lower rally highs and suggest a return to medium-term demand dominance.