South Africa, the world's largest producer of platinum, should increase output by six to nine per cent this year to around 5.2 million ounces.

However, analysts quoted by Reuters warn that fluctuations in the rand could temper this increase.

Fidelis Madavo, Citigroup analyst in Johannesburg, stated: 'I'm expecting increases pretty much from all the producers, but the jury is still out. If the rand remains where it is, then you might see some more rationalisations.'

The strength of the rand, which increased 28 per cent last year on top of 40 per cent gains the previous year, has cancelled out production gains jeopardising some marginal projects.

Anglo American Platinum (Angloplat), the world's largest platinum miner accounting for a third of global production, last month delayed a number of projects and lowered its output forecast to 2.45 million ounces for 2004 due to surges in the rand.

While this forecast still represents an increase of 6.5 per cent, Angloplat explained its production targets were based on an exchange rate of seven rand to the dollar and that projects would be speeded up or delayed depending on movements in the value of the rand.

Analysts at UBS Warburg added that while some operations could close temporarily if the rand increases further, many firms take a long-term view of currency fluctuations with the rand eventually expected to weaken.

The projects most vulnerable to delays caused by the strength of the rand are those at marginal sites on the eastern limb of the Bushveld complex, where ore contains less metals.

According to Reuters, Angloplat has already slowed its Twickenham and Der Brochen projects there and Implats is expected to abandon its Two Rivers projects on the eastern limb.

However, other firms such as SouthernEra Resources and Lonmin are to continue with new projects there.