Aquarius Platinum Ltd. (AQP.LN) said Monday it will halt its Marikana mine in South Africa due to low prices for the metal, a move analysts said could be the start of wider production cuts across the industry currently struggling with rising costs and weak demand.

"Trading conditions in the platinum industry are expected to remain difficult in the short-to-medium term and these conditions have rendered the operations at [Marikana] uneconomic," Aquarius said in a statement.

Marikana accounted for 11% of Aquarius' platinum output in 2011 and is run jointly with Anglo American Platinum Ltd. (AMS.JO).

Platinum prices on the spot market are trading down around 17% from the 2012 high hit in February. Costs are up in South Africa, the world's largest platinum producer, while demand for the metal, which is largely used in cars to clean exhaust, is weak.

"We believe we may finally be close to witnessing industry-wide supply discipline and production cuts," said Dominic O'Kane, an analyst at Liberum Capital.

The process to place the Marikana mine and concentrator on care and maintenance follows a decision by Anglo American PLC (AAL.LN) earlier in the year to review its platinum operations, which it said could include closing some mines.

Anglo Platinum has already cut capital spending plans at its South African platinum mines, by about 1 billion rand ($13 million) both last year and the same for 2012. The company decided to prioritize less capital-intensive projects in the near term given volatility in the platinum markets and escalating costs.

And in May, Lonmin PLC (LMI.LN), the world's third largest primary platinum producer, warned there was a risk production plans in the industry could change, given "an unrelenting depressed pricing environment."

Metals consultancy GFMS estimates that the platinum market will be in a structural surplus of 735,000 ounces this year while consultancy Johnson Matthey said the 2012 surplus will be similar to last year's, which was 430,000 ounces.

The Marikana closure won't significantly alter the supply and demand balance but could signal a willingness on the part of Anglo Platinum, the world's largest producer, to remove excess and inefficient capacity, said analysts at Panmure Gordon & Co.

Marikana produced 52,962 troy ounces in its 2011 financial year, which accounts for about 1% of global supply.

As of 0948 GMT Aquarius shares on the London Stock Exchange were down 0.19% at 73.36 pence.

-By Devon Maylie, Dow Jones Newswires; +27117837848; devon.maylie@dowjones.com (Francesca Freeman in London contributed to this report.)

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