Platinum and palladium futures have soared to multi-month highs amid fears that both metals will become scarce if the South African platinum industry delivers on calls for widespread mine closures.
"This industry is in a crisis," said Cynthia Carroll, chief executive of Anglo American PLC, the world's largest platinum producer, and second-largest palladium producer.
Platinum and palladium are often found together. Anglo American last month announced plans to cut platinum production 20%.
Carroll said the company planned to create at least as many jobs as the 14,000 positions affected by the restructuring, and that the company was entering a dialogue with the South African government and labour unions to develop a sustainable solution.
South Africa is the world's largest source of both precious metals.
Investors rushed to stock up on the white metals amid fears that supply cuts will lead to scarce availability of both metals.
Palladium futures soared to a 17-Month high, with the March-delivery contract climbing $US7.65, or one per cent to settle at $US765.45 a troy ounce on the New York Mercantile Exchange.
Platinum for April delivery settled at a four-month high, climbing $US9.10, or 0.5 per cent, to end at $US1,707.20 a troy ounce on the Nymex.
Precious metals investors and analysts say that stronger economic growth in the US and China will also boost demand for both platinum and palladium. Both metals are used to make catalytic converters, or exhaust filters, for the global auto industry.
Catherine Raw, a portfolio manager at BlackRock Inc, said platinum prices were more likely to rise in 2013 as the global economic landscape continued to improve.
"You have a demand environment that's effectively stabilizing and improving, and you have a supply environment that is challenged," she said.
Anglo American's Carroll also announced plans to invest 100 billion rand (about $A10.89 billion), into Anglo's South African platinum business.
However, some industry watchers say this investment may not lead to additional supply down the road.
"There's no guarantee as to what exactly their capital plans are and how effective that's going to be," said Will Rhind, precious metals analyst with ETF Securities, a provider of exchange-traded funds.
