Platinum supply is set to suffer setbacks in the coming months with two major producers facing problems in South Africa.

According to reports platinum and gold mines in South Africa are facing production hitches and this may hit platinum production badly. A recent report said that Platinum Australia is struggling to tackle challenges in mining in South Africa. Production from its flagship Smokey Hills mine for the three months to June was up five per cent at 8,680 ounces of platinum, palladium, rhodium and gold compared to the previous quarter, when operations were hampered by industrial action and power interruptions. Its challenges continued during the June quarter, when it came across several small potholes - depressions in the basin shape - within the mine, in addition to a large one encountered previously. This 30 metres deep pothole was bad luck, but Platinum Australia was working hard to develop new mining spots so it could work around potholes and keep production on target.

Potholes were common in the East Limb of the Bushveldt and the possibility of their existence at Smokey Hills had been factored into reserve estimates. Platinum Australia said its current production forecast for the September quarter was 15,000 ounces.

Platinum Australia said about $1.5 million in power costs had been added to its quarterly expenses, with the company getting more than half of its power from diesel generators due to a delay in connecting grid power by Eskom, South Africa's state-owned electricity utility.

In another development, Aquarius Platinum Ltd, the fourth- largest producer of the metal, may shut the Blue Ridge mine it bought last year in South Africa for seven months to improve safety and efficiency.

Production from the mine in the 2011 financial year may be substantially lower than guided, the company said in a statement. Aquarius had planned to increase output to 120,000 ounces of platinum group metals during the year.

Blue Ridge, a joint venture with Imbani Platinum Ltd, requires fundamental redevelopment.

A safety review was started at Blue Ridge after two fatalities in the quarter ended June 30, during which the mine lost 22 production days because of stoppages ordered by government inspectors who visited the mine eight times. Platinum group metal output from Blue Ridge fell by a third to 10,202 ounces during the three months.

Australia South Africa Eskom Fall