[miningmx.com] – THE price of platinum gained 2% in trade today, an improvement of $30/oz, the day after the South African government dissolved an inter-departmental task team aimed at resolving the 20-week strike in the sector.
Analysts, however, were sceptical on whether the price gain finally signaled nervousness among buyers regarding the extent of above-ground stocks. “It’s a small market in terms of dollars per day traded,” said on UK analyst.
“We are trying to work out if this is one fund going long on the physical or speculating that the strike won’t get solved based on today’s news, or just the natural tightening of the physical market,” he said.
The platinum price is virtually unmoved from when the strike was first called on January 23 by the Association of Mineworkers & Construction Union (AMCU) which demanded a basic R12,500 per month salary for entry-level workers.
Platinum producers, Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin have countered with a 9% basic pay improvement which equates to a R600m increase in year one. AMCU’s demand is a R1bn increase in wages in the first year – a level platinum firms say will result in widescale restructuring.
Said another analyst: “We are seeing investors and there’s little faith in prices yet. It seems that there is still inventory around”. The price of platinum was last trading at $1,477/oz while sister metal, palladium, touched a three-year high.
Mines minister, Ngoako Ramatlhodi, expressed confidence today that platinum producers and the AMCU had been given the impetus to find an agreement with talks focusing on how to massage up the basic pay level.
Ramatlhodi said that platinum producers could roll up the housing allowance paid to workers in benefits, equal to about R1,700 to R1,900 per month, into the basic pay portion of wages, provided the South African government accelerated the delivery of housing for workers. This might help meet the R12,500 per month target in about three to four years.
“We have given them the key, they haven’t taken the key yet. I’m sure they will continue to discuss this. When I left, they were looking at the next step,” said Ramalthodi, who added that the strike constituted a “grave” situation.
“The longer the strike goes on, the more likelihood of shafts being closed,” he said.
“Lonmin has no other assets but those in the affected areas [Rustenburg] so production is zero. If you understand that, you see the danger that is creeping. If stockpiles are getting depleted, they won’t be able to sustain operations,” he said.
Another impending problem for South Africa is the sovereign rating reviews from rating agencies which are due from Friday (June 13).
Peter Leon, head of the mining and energy unit at attorneys Webber Wentzel, commented in response to a Miningmx tweet regarding the dissolution of the inter-departmental task team: “It’s really not good news … what’s worse it must add to the prospect of a sovereign ratings downgrade on Friday”.
