"Platinum prices are being boosted by the ongoing labour problems affecting the major producers in South Africa coupled with a rising trend for gold and the other precious metals that tend to move with it."
Author: Lawrence Williams
LONDON (MINEWEB) -
"The platinum double-whammy is already beginning to take effect as it closes the big price gap on gold, and given the ongoing labour problems in South Africa one shouldn't be too surprised if the difference narrows even further. Indeed, perhaps platinum could even return to its normal position of commanding a premium over gold should the unrest on the platinum mines continue. And there's certainly no end in sight yet.
"The big dip in the platinum price, which took it down below gold in the second half of last year, where it has stayed since, has largely been due to a perceived substantial production surplus as demand has been affected by the global economic downturn given that nowadays platinum is primarily an industrial metal, although with jewellery overtones. With the South African mines hugely dominant in terms of global supply, this side of the equation is being drastically reduced with serious production disruptions at all three of the world's top producers - Anglo Platinum (Amplats), Impala Platinum (Implats) and Lonmin. Last year's platinum surplus was estimated at around 400,000 ounces and the loss in South African production through the ongoing labour problems, which have turned extremely nasty, has to be already approaching this figure - indeed it may even have exceeded it with Lonmin's big Marikana mine still at a standstill and the No. 1 producer, Amplats, having had to suspend operations at its massive Rustenburg operations for worker safety reasons given intimidation by other striking workers in the area, as well as by political agitators. Implats too has not been immune from disruptions - and indeed was the original seat of the labour difficulties in the area with major loss in production as a result early this year, and new pay rumblings within its workforce.
"Double whammy? However illogical it may be platinum group metals are affected by the gold price and broadly if the latter rises, pgm prices do too. The U.S. Fed's latest stimulus announcement has not only thus seen a substantial jump in the gold price, but an even larger one in platinum in percentage terms with the latter closing the gap ...."