  | |
| |
 |
|
| ||
Pt producers' existential crisis Posted: Fri, 18 May 2007 [miningmx.com] -- THE virtues and demerits of the recently announced platinum-backed exchange traded funds (ETFs) were a quietly but poignantly discussed feature of Platinum Week, the annual industry talkshop. It's worth remembering that platinum producers first denied the advent of an ETF when it was speculated last year. And when one was announced, in March, they responded angrily declaring they would not be supplying metal into them: one from ETF Securities and another from the Swiss Cantonal Bank. In fact, the force of the response seemed a little unnecessary particularly if the impact of it - as platinum producers insist - would be minimal. It looked like a classic case of denial. This week, comments at Johnson Matthey's annual review appeared to capture the latent tension created by the ETFs. Bill Sanford, who heads JM's precious metals division, said the EFT could be good because it would bring more investment dibs into the platinum market, but excess investment would be bad. It sounded like he didn't want to appear alarmist, cautiously welcoming the EFT, but hoping they wouldn't really take off. And they may not. Volumes so far for the two ETFs have been small. But Edel Tully, head of precious metals at Mitsui Global Precious Metals, made the point that more ETFs were almost certainly on the way, and in crucial markets. "While offtake is slow it is steady. But it's just a matter of time before the ETF is launched in the US. "Then the door is wide open as the biggest obstacle was creating the ETF in the first place," she said. This reminds one of the first gold-backed ETF that started in a spluttering way on the Australian Stock Exchange around 2002 or so. It too was derided early on as a failure. Eventually, after overcoming various obstacles, an ETF was launched in New York and the offtake was exponential. It's now thought there's more gold in private hands than in those of the central banks owing StreetTracks, the US ETF. JM argues that ETFs will introduce yet more volatility that will make it nearly impossible for platinum producers to plan. But there are other reasons. Lonmin CEO, Brad Mills, said the fear among producers is that ETFs will press the price of platinum and other platinum group metals so high that substitution will be sought for its wide and profound industrial uses, thus fundamentally harming the market. But he acknowledges, too, that this is more easily said than done. You don't just go about easily inventing new ways to replace a metal as strategically as important as platinum. Click Here to subscribe to our daily newsletter
| ||||||||
0% 
