[miningmx.com] — THE global supply of platinum is expected to rise slightly this year, with upcoming wage talks in South Africa not expected to have a big impact, research firm GFMS said on Thursday.
The GFMS said overall supply is expected to rise by around 500,000 ounces this year from the 6.19 million ounces produced by mines last year. Including scrap, supply stood at 7.69 million ounces last year, it said.
Unions are due to start wage talks with the companies in the coming months.
Disagreements over wages have led to strikes and production shutdowns in the past. Northam Platinum suffered a six-week strike over wages last year which cost the company R380m in revenue losses.
“While the situation remains challenging in South Africa (including risks surrounding this year’s wage negotiations), there appears little prospect of the major disruptions of 2007 and 2008 being repeated, althouth our assumption of ‘moderate’ growth allows for a measure of disturbance,” the GFMS said.
South Africa produced 4.75 million ounces of platinum last year, the GFMS said.
A recovery in global platinum demand and rising prices have boosted producers, but South African miners have been battling with electricity shortages, rising power and wage costs, a strong rand and stricter safety rules.
The National Union of Mineworkers said this week it was demanding a 14% rise for its members at Impala Platinum, the second-largest producer, which is more than three times the March inflation rate of 4.1%.
The union has said wage settlements need to take into account higher food prices and fast-rising costs of fuel and power, which are hurting low-income households.
But the industry has warned that above-inflation wage demands could make the sector uncompetitive. Producers such as Implats, who also have operations in neighbouring Zimbabwe, holding the world’s second-largest reserves, have also been hit after the government turned up the heat on foreign firms and gave them six months to sell majority stakes to local black investors.
“It remains to be seen how pragmatically the indigenisation process will be implemented, especially with regards to the credit of social and infrastructure investments that have already been made,” the GFMS said on Zimbabwe.
