Search Results for "Africa"

Amplats Considers Floating South African Mines

Reuters reported that Anglo American Platinum (OTCMKTS:AGPPY) may float its South African mines instead of selling them because it had received offers that were too low.

As quoted in the market news,

One Johannesburg-based investment banker also said the company, commonly known as Amplats, had received a few offers for its Union Mine and three others near Rustenburg but had “thrown them into the dustbin” because they were too low.

Click here for the full Reuters report


Norilsk Sees Africa Cutting Platinum Output

Bloomberg reported that OAO GMK Norilsk Nickel sees South Africa cutting platinum output in the coming years.

As quoted in the market news,

Production of platinum and palladium, which are mined from the same deposits and used in automobile catalytic converters, has been lower than demand since at least 2012. Opaque stockpiles held by hedge funds have contributed to price volatility, according to Norilsk.

Anton Berlin, head of strategic marketing at Norilsk, stated:

Investments in a vast amount of projects in South Africa were delayed and it’s hard to expect an increase in output in the region. Most likely, it will even fall.

Click here for the full Bloomberg report


Proposal of Establishment of South African PGMs Exchange Delayed

Mining Weekly reported that the vested interests of the existing market structures and the lack of understanding within the industry and in government’s policy creation circles are the reasons behind the delay in the establishment of PGMs exchange in South Africa.

As quoted in the market news,

As more than 80% of the world’s known platinum-group metals (PGMs) reserves are in South Africa, it is ideal that a PGMs exchange be established locally to ensure that the country receives maximum benefit from its mineral wealth, avers investment company Pan-African Investments & Research Services CE Dr Iraj Abedian.

Abedian has been advocating the establishment of a locally based PGMs exchange for about the past five years.

Click here for the full Mining Weekly report


Ivanhoe Mines Resumes Site Work at Platreef Project in South Africa

Ivanhoe Mines Ltd. (TSX:IVN) announced that preparations have begun for a resumption of site work at its planned underground mine at the company’s Platreef project in Limpopo, South Africa. Drilling for metallurgical testing samples seeking to identify platinum-group metals is planned for 2017 after work on the shaft and related mining-plant components is completed.

As quoted in the release:

Ivanhoe Mines Executive Chairman Robert Friedland and Chief Executive Officer Lars-Eric Johansson confirmed today that preparations have begun for a resumption of site work for the construction of the initial production shaft as part of the first phase of development of the planned underground mine at the company’s Platreef Project on the Bushveld’s Northern Limb, in Limpopo province.

Executive Chairman Robert Friedland stated:

For a long time now, the development of our Platreef Project has been a destiny waiting to be fulfilled. It is said that great mines are ‘made’, as much as they are ‘found’.

Our Platreef story began more than 20 years ago when Bill Hayden, the Australia-based international geologist who founded Platreef Resources in 1988, approached Ivanhoe Capital to discuss potential exploration financing…

Mr. Hayden’s pitch coincided with preparations by one of Ivanhoe Capital’s affiliated companies, African Minerals Corp., to organize its own reach for opportunities in southern Africa’s mineral fields. We discovered we shared a keen interest in finding a door to South Africa’s platinum club on the Bushveld.

Click here to see the full new release.


Construction Delays Reported at Robert Friedland’s South Africa Platinum Mine

Ivanhoe Mines (TSX:IVN), lead by billionaire Robert Friedland, has run into delays in construction of its $1.6 billion Platreef mine, according to Bloomberg. The news outlet reported that the roadblock is due to a disagreement between the miner and South Africa’s mines ministry regarding benefits of the mine to local communities.

As quoted in the publication:

South Africa’s Department of Mineral Resources delayed authorization to start building the $1.6 billion Platreef mine by 12 weeks to a target date of Nov. 26, saying some elements of the company’s plan to benefit the surrounding community were “sketchy” and did “not offer much,” according to an Oct. 2 letter sent to Ivanhoe and seen by Bloomberg. The department said its demands were “not exhaustive” and it may request “further clarification” before it gives the go-ahead.

Ivanhoe CEO Lars-Eric Johansson said on October 9:

We believe that each and every formal request by your department to date has been accommodated.

Click here to read the full article.


Russia, South Africa to Become the OPEC of Platinum?

Russia, South Africa to Become the OPEC of Platinum?

Platinum and palladium are not performing as well as expected this year, and major producers Russia and South Africa have decided to do something about it. Bloomberg reported last Wednesday that the two countries will meet next month to discuss their mutual interest in the white metals, and the possibility of bolstering prices.

According to Russian Minister of Natural Resources Sergei Donskoi, one idea is to use central banks to increase platinum and palladium purchases. ”This won’t be a trading agreement, but the main aim of this cooperation is to put together the interests of the two countries in this field,” he told Bloomberg.

It’s a scenario that Mineweb’s Kip Keen recently likened to the formation of the Organization of the Petroleum Exporting Countries (OPEC), noting that despite legal ambiguities surrounding the oil producers’ arrangement, OPEC has “long got away with” what it set out to do. However, he believes the comparison also illustrates the legal difficulties of such an endeavour.

Could it work?

Most signs point to “no,” although there are some positives inherent to the idea. Keen sees the plan as “the least silly idea circulating in the bid to boost platinum prices.” As he explains in his article, nations are more difficult to pin down as the guilty party than other entities when it comes to price-control schemes.

“Look at OPEC,” he states, noting that while some have cried foul over the organization’s control over the oil sector, none have succeeded in bringing the group down.

However, he notes that mirroring the idea with platinum would be incredibly messy and complicated. Harry First, a law professor at the New York University School of Law — who is well versed in the legality of OPEC-type situations — confirmed Keen’s concerns.

Although First said that the nations “could probably do it,” he agrees that such a price-control arrangement would face strong opposition on all fronts: from the public, from end users and of course, from other countries as well.

Not-so-mutual interests

David Jollie, strategic analyst at Mitsui & Co Precious Metals, has also expressed his doubts. In an interview with BizNews.com, the analyst stresses that the two countries actually produce different metals; South Africa is mostly platinum focused, while Russia has mainly palladium. Both players have relationships with different miners, producers and customers, and the analyst believes that “whether they actually share enough interests to want to move the same way in the market will be interesting to see.”

Jollie sees price-boosting efforts as a possibility, but whether it will happen at the state level is “a much more dubious question.”

Even domestic companies may be hesitant about the potential PGM-buying partnership. Russia’s Norilsk Nickel (OTCMKTS:NILSY,MCX:GMKN) has spoken out against the state buying up palladium in the past, stating “[p]alladium is not a gold and currency reserve … It should be sold rather than bought by the state.” BullionVault notes that the company said recently that it is planning to buy palladium from Russia’s government.

Wait and see

There are a number of other roadblocks that such a price-control arrangement could encounter — there’s a good chance the countries’ trading partners wouldn’t be too pleased. However, investors with a stake in platinum and palladium will no doubt be watching for results of the talks next month to see what the top PGM-producing countries come up with.

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.


South African Mine Output Drops to Lowest Since Late 2012

Reuters Africa reported that mining output from South Africa has fallen to its lowest in 19 months, with those losses mostly driven by decreased platinum group metals production.

As quoted in the publication:

Mining output in Africa’s most advanced economy dropped 7.7 percent year-on-year in July, from a revised 5.4 percent decline in June, Statistics South Africa said, with output largely hit by platinum group metals, which fell more than 45 percent.

Economists polled by Reuters had expected mining output to contract 6.35 percent.

Click here to read the full article.


Lonmin Plans to Cut 21% of Workforce in South Africa

The Guardian reported that South African focused platinum producer Lonmin (LSE:LMI) expects to cut roughly 21% of jobs at its South African operations. The cuts come “as part of a drive to increase profits” following this year’s protracted strikes, according to the Guardian.

As quoted in the publication:

The company, the world’s third-largest producer of the precious metal used for emissions-capping catalytic converters, said in June that the strike and low prices meant restructuring of the business had become inevitable.

Job cuts could trigger more labour unrest, including strikes by the Association of Mineworkers and Construction Union (AMCU).

“There will be six shafts closed and 5,700 jobs will go. That is the plan,” the Johannesburg source, who declined to be identified, said. Lonmin has a staff of about 27,000.

The source did not disclose which shafts would go but said Lonmin had decided it could no longer subsidise the loss-making shafts and had to focus on the profitable ones.

Click here to read the full Guardian article.


Northam Platinum Wants to Buy South African Mines

Reuters reported that South Africa’s Northam Platinum (JSE:NHM) wants to buy up South African platinum mines despite recording full year losses due to protracted strikes earlier this year. According to Reuters, Northam has reviewed its strategy due to what it sees as opportunities arising in the sector.

As quoted in the publication:

The mid-tier platinum producer said it would use its positive cash position and call on shareholders for funds to enable it to acquire assets. ”We do believe that we have good support from our institutional shareholders. If we have got the government right behind us – and we work shoulder to shoulder – we could be able to raise the money,” Northam chief executive Paul Dunne said at a results presentation on Thursday.

Anglo American Platinum (Amplats), the world’s top platinum producer, said in July that it plans to sell a slate of mines in its drive to recover from a five-month strike and shift towards more mechanised mining.

Click here to read the full Reuters article.


Platinum Group Metals Files NI 43-101 Technical Report for South African Projects

Platinum Group Metals Ltd. (TSX:PTM,NYSEMKT:PLG) announced that it has filed the NI 43-101 technical report associated with its June 12, 2014 announcement regarding an increase in the estimated inferred mineral resource at its Waterberg joint venture and adjacent Waterberg Extension, both located in South Africa.

As quoted in the press release:

The report, entitled ‘Revised and Updated Mineral Resource Estimate for the Waterberg Joint Venture and Waterberg Extension Projects, South Africa (Latitude 23 degrees 22′ 01″S, Longitude 28 degrees 49′ 42″E)’ is dated effective June 12, 2014 and was prepared by Kenneth Lomberg, B.Sc. (Hons) Geology, B. Com., M. Eng. Pr.Sci.Nat. and Alan Goldschmidt, Pr.Sci.Nat., of Coffey Mining (SA) Pty Ltd. supporting the disclosure of the updated inferred mineral resource estimate. The technical report is consistent in all material respects with the inferred mineral resource estimates announced in the Release. A copy of the report can be found at www.sedar.com and on the Company’s website.

Click here to read the full Platinum Group Metals Ltd. (TSX:PTM,NYSEMKT:PLG) press release.


At Surface and Out of Africa: CEO Greg Johnson on Wellgreen Platinum’s Yukon Project

At Surface and Out of Africa: CEO Greg Johnson on Wellgreen Platinum's Yukon ProjectSouth Africa, long known as a platinum and palladium powerhouse, saw an end to a protracted miners’ strike last week. However, the white metals are still rallying, and South African mines will take time to ramp up production again. In light of those factors, investors and analysts may be interested in looking at companies that operate outside that country. 

One such company is Wellgreen Platinum (TSXV:WG), which holds the Wellgreen deposit, a large PGM-nickel-copper deposit in Canada’s Yukon. It features mineralization that begins at surface rather than deep underground, making it noteworthy for miners and investors alike.

To find out more about the company, Platinum Investing News (PIN) spoke with Wellgreen’s president and CEO, Greg Johnson. In the interview below, the CEO discusses the unique characteristics of the Wellgreen deposit, the importance of PGM projects in mining-friendly jurisdictions and what’s next for Wellgreen Platinum.

PIN: Just to start off with, I don’t think we’ve covered Wellgreen extensively on our network before, so could you tell our readers a bit about your company?

GJ: Wellgreen is a PGM-focused exploration and development company, and our primary asset is the Wellgreen project, which is located in the Yukon territory. It’s one of the largest undeveloped platinum and palladium resources in the world at about 10 million ounces, and it’s an open-pittable type deposit. This is quite unique in that most of the world’s platinum and palladium is concentrated in Southern Africa and Russia, so a large deposit in general is quite rare, and one that’s located in Canada in an open-pittable type configuration is even more scarce, so we’re seeing strong investor interest in the company. We just recently completed a $6.9-million financing that’s going to allow the company to move seamlessly into the prefeasibility level of activity this field season.

PIN: How does the Wellgreen deposit compare to others around the world?

GJ: Wellgreen is one of the largest undeveloped projects of its kind in the world, and has the potential to be a very significant producer. Most of the world’s platinum and palladium production is coming from deep, underground mines that are quite costly to operate, very labor intensive and don’t have the ability to really scale up the way you can with an open pit.

Our project is quite unique in that its very wide widths of mineralization start right at surface and are typically between 100 and up to 700 meters wide. So in many ways our project would look more like a porphyry copper-gold type deposit, except that our metals are PGMs and nickel. This is a project that was historically developed back in the 1970s by HudBay Minerals (TSX:HBM) as a high-grade underground operation, but since the late 90s, the focus has been on looking at it as a bulk mineable deposit, and that has been the focus of Wellgreen Platinum’s activities as well.

PIN: Interesting. I’ve seen a few comparisons between platinum deposits; for example, Ivanhoe Mines’ (TSX:IVN) Flatreef deposit in South Africa vs. the Bushveld Complex. How does Wellgreen compare to that deposit?

GJ: In terms of comparison, what makes the Ivanhoe and Platinum Group Metals (TSX:PTM,NYSEMKT:PLG) deposits stand out from the others in South Africa is that even though they’re mostly underground, they have much greater widths of mineralization than is typical of the area. I believe with Platinum Group Metals it’s around 25 meters width and I think for Ivanhoe it’s up to 90 meters in width.

Our mineralization on the western end of the Wellgreen deposit, where it’s the narrowest, is about 100 to 200 meters in width, and it widens out to over 500 meters at surface in the central part of the deposit; it then expands to almost a kilometer wide at the eastern end of the deposit where it’s open. So it’s a very large system, and we’re also fortunate with the geometry, since mineralization starts right at surface as opposed to being a kilometer deep or more, which is more typical in South Africa and Russia. And that’s just really the result of the particular geologic setting that we have at Wellgreen, which means that it happens to be exposed right at the surface. That allows us to look at far wider zones of mineralization with a slightly overall lower grade because it’s open-pit mining cost as opposed to underground mining cost.

PIN: How unusual is it to have an open-pittable platinum deposit?

GJ: It’s quite unusual, around 95 percent of the world’s platinum production is from underground mines. There are a handful of projects in the first world that are open pit and those tend to be the lowest-cost producers. I think much like we’ve seen in the gold and the silver business over time we’re going to see a migration towards the lower-cost, higher-scale open-pit type operations. The challenge is you have to have the right kinds of geology, the right rocks to host these deposits, and the ultramafic rocks that host ours are exceedingly rare; they only occur in a few places globally.

PIN: And you said there was historic mining in the area?

GJ: Yes, the historic infrastructure is still in place and available. We are right now updating our preliminary economic assessment on the project and targeting this summer for release. It will update the overall resource estimate on the project, as well address the major objective of converting a significant portion of the inferred ounces into measured and indicated.

Importantly, it will also update the overall approach to the mining of the project. The new approach that’s being developed is looking at a smaller-scale operation that has lower capital investment up front, but is focused on higher-grade material, so we think that should enhance the economics. Then, later in the mine plan, the project gets naturally wider as we start mining deeper and towards the east the project; at that point, we would likely scale up to a higher throughput level with the geometry of the deposit changing. And that could result in the project being one of the largest first-world producers of PGMs.

PIN: What does your timeline look like in terms of getting to commercial production?

GJ: Right now we are looking to start prefeasibility activities in the second half of this year. That would likely allow us to start feasibility activities in 2015, so potentially we could be looking at a construction decision in 2017, which would allow for first production in 2018 or perhaps 2019. For a development-stage project, it has the opportunity to move quite rapidly, and because the Yukon is one of the best jurisdictions for mining in Canada, there’s a very straightforward permitting and regulatory process to move the project forward to production.

PIN: Your website highlights the importance of your projects being outside of South Africa and Russia, which have been problematic jurisdictions in the past, but are the world’s largest PGM producers. What is the importance of platinum and palladium projects outside of these jurisdictions?

GJ: Starting on the demand side in general, the fundamentals for platinum and palladium are quite different than what we see today in gold and silver. Platinum and palladium are also precious metals, but the single largest use for both is catalytic converters in automobiles. So we’ve basically seen nearly continuous demand growth since the mid-1980s for platinum and palladium, particularly for catalytic converters. As higher emissions standards are implemented in the first world and in the developing world, we’re seeing that growth continue.

That demand growth was matched up until the mid-2000s, with new mine supply of platinum and palladium as one might expect, but because of the challenges of mining deep underground in South Africa and in Russia, we’ve seen falling mine supplies since 2006 for platinum and since 2004 for palladium. The main decrease in supply on the platinum side was due to a decrease in production supply from South Africa, while the main decrease in supply of palladium came from decreasing supply out of Russia. So the opportunity to have a project located in Canada that has an open-pittable and very saleable configuration that could add to the source of supply outside of Southern Africa or Russia has real strategic value.

PIN: Given the current situation in Russia and South Africa, what do you think the future holds for PGM producers in North America?

GJ: Well, the trend was in motion well before the strike in terms of declining supply out of South Africa and Russia, so most analysts continue to project deficits in terms of mined supply vs. total demand for the metals. That’s obviously very bullish for projects that are in areas that don’t have the same kind of political and operating risks that we see today in South Africa and Russia. We would not expect that the removal of the strike would significantly change the overall fundamentals, and in fact, you’ve taken about a million ounces of platinum off the market this year from the strikes, so potentially with that lack of production taking away additional sources of supply for the market, I think analysts are expecting looking to see continued increase in prices looking forward to at least 2020.

PIN: Well, that’s good news. Did you have anything else to add?

GJ: The other point that we would make is that this is a very large property position. The deposit that we’re working on in the main Wellgreen area is about 2.5 kilometers long and has about 800 drill holes that define the resource, so it’s quite well understood. But that is just one part of an 18-kilometer-long overall geologic system. There has been modest historic work done on those other areas, where the host rocks come to surface, but that’s one of the things we’re also looking at and we’re certainly open to the possibility that this could be more of a district scale operation or play.

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: Interviews conducted by the Investing News Network are edited for clarity. The Investing News Network does not guarantee the accuracy or thoroughness of the information reported. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence. 


Anglo American Puts South Africa Mines Up For Sale

Reuters reported that following earlier indications that American Platinum (LSE:AAL) might sell its assets in South Africa, the miner has indeed put its mines up for sale.

As quoted in the publication:

The Sunday Times said the disposal programme was agreed by the board at a strategy meeting this month and could raise up to $4 billion. Other assets up for sale include its nickel business and copper mines in Chile, it said.

Click here to read the full Reuters article.


South Africa Miners Return to Work

Reuters reported that workers at South African platinum mines owned by Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) cheered as they returned to work this week following the end of a five month strike. As Reuters wrote, the strike has so far cost the companies an estimated over $1 billion in revenues.

As quoted in the publication:

Lonmin had set up huge canvas tents in a nearby stadium where miners underwent medical and other checks. Calling for a “living wage” for its members, many of whom live in poverty, the Association of Mineworkers and Construction Union (AMCU) had demanded an immediate doubling of basic wages to 12,500 rand (£694) a month. In the end, it settled for raises of up to around 20 percent annually. The companies will find even that increase hard to absorb. Around half of the country’s platinum shafts were losing money even before the strike.

Edward Sterck at BMO Capital Markets told Reuters:

The market is probably still underestimating the true cost of the strike on the companies’ balance sheet and the cost of returning operations to production. So until we have got visibility on that I would remain somewhat cautious. The focus for investors will be whether we see any upward movement of the platinum price and also some clarity on what the true cost of the strike has been.

Click here to read the full Reuters article.


South African Platinum Strike “Officially Over”

South African Platinum Strike "Officially Over"

A five-month strike at the South African operations of major platinum miners Anglo American Platinum (OTCMKTS:AGPPY), Lonmin (LSE:LMI) and Impala Platinum Holdings (OTCMKTS:IMPUY) is “officially over,” Joseph Mathunjwa, leader of the Association of Mineworkers and Construction Union (AMCU), said today. 

According to Bloomberg, the deal, which is to be signed tomorrow, “includes annual increases of 1,000 rand a month for the lowest-paid underground workers for the first two years of the agreement and 950 rand in the third year.” Current pay for those workers is between 5,000 and 6,000 rand per month.

Initially, the AMCU had demanded that basic wages be immediately be more than doubled to 12,500 rand a month, Reuters states.

The companies involved in the strike have not yet commented, CBC News notes, but AMCU members are certainly pleased with its resolution. ”[T]ens of thousands of workers packed into Rustenburg’s Royal Bafokeng Stadium” greeted Mathunjwa’s statement with “unrestrained jubilation,” as per Reuters.

Mathunjwa seems happy as well. He told those assembled, “[t]oday we are creating a historic day in the mining sector. The platinum sector will never be the same. What other unions have failed to do over many years, you have achieved in five months.”

That said, it won’t be all sunshine and roses moving forward.

South Africa’s platinum industry is now headed for a “painful restructuring,” Reuters notes, “with job cuts almost inevitable.” Indeed, Elize Strydom, the chief negotiator of the country’s Chamber of Mines, is quoted by Bloomberg as saying, “[t]he hard work starts now. It’s going to take time for production to get to levels prior to the strike. I think we are still going to have to do a lot of work to convince the world and investors that platinum is a good commodity to invest in.”

The good news is that thus far, platinum and palladium prices don’t seem to have been hurt by the announcement. The Wall Street Journal said that platinum for July delivery ended today at $1,456.60 per ounce, down just 0.1 percent, while palladium for September delivery rose 0.1 percent to close at $822.65 per ounce.

Even more encouragingly, the news outlet quotes Bill O’Neill, a principal at Logic Advisors, as saying, “[t]he global demand picture for these metals is still quite excellent, and supplies are low. Longer term, the fundamentals are there for a continued rally.”

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Related reading: 

Platinum Price Unmoved as South African Strikes Enter Week 11

All Talk and No Progress as South African Platinum Miners Meet with Unions

Platinum Takes a Break from Rising Prices, Strike Continues


Platinum Falls on News of South African Agreement

Bloomberg reported that the white metal, along with its sister metal palladium, fell after rising earlier this week following news of a possible resolution to an ongoing strike in South Africa. According to Bloomberg, Amplats (LSE:AAL), Implats (JSE:IMP) and Lonmin (LSE:LMI) have reached an agreement ‘in principle’ with the Association of Mineworkers and Construction Union to end the strike.

As quoted in the publication:

Platinum for July delivery dropped 2.4 percent to $1,445 an ounce in New York. It reached $1,488.40 yesterday, the highest since May 23. Prices rose 5.3 percent this year, compared with palladium’s 15 percent gain. Anglo American Platinum Ltd., Impala and Lonmin Plc expect to get feedback tomorrow. South African government-led meetings ended June 9 without agreement. The AMCU is meeting members at various mines today to obtain members’ opinion on the proposal.

Click here to read the full Bloomberg article.


South African Mining Minister Presents New Offer for PGM Miners to Consider

The Wall Street Journal reported that South Africa’s Mining Minister Ngoako Ramatlhodi has given a new offer to major platinum miners Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) in South Africa in an attempt to end an ongoing strike in the country. The mining minister sent the proposal on behalf of the Association of Mineworkers and Construction Union, according to the Journal.

As quoted in the publication:

The AMCU has demanded higher wages for its members. An earlier wage offer by the platinum producers was rejected by the union, according to two people familiar with the negotiations. Mr. Ramatlhodi said the companies requested time to consider the latest proposal from the union. The AMCU didn’t respond for a comment when contacted by The Wall Street Journal.

Click here to read the full Wall Street Journal article.


Platinum Futures Up on South Africa Strike

Bloomberg reported today that platinum-group metals are doing well amidst supply concerns due to an ongoing strike in South Africa. Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) plan to attempt mediation again on Tuesday, according to the news outlet.

As quoted in Bloomberg:

Platinum futures for July delivery rose 0.9 percent to $1,481.60 an ounce. South Africa is the biggest producer. Holdings in ETPs backed by the metal rose to a record, according to Bloomberg data.

London VTB Capital analyst, Andrey Kryuchenkov, said:

The potentially devastating long-term damage to the industry amid ongoing strikes in South Africa is to in any case keep a floor under platinum-group metals prices.

Click here to read the full Bloomberg article.


Major Platinum Miners Expect Workers to Return to Work, South Africa

Reuters reported today that representatives from major miners Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) have sad that they expect many workers to return to work on Wednesday. The miners took wage offers directly to workers after negotiations faltered with the Association of Mineworkers and Construction Union, and now say that many will break the ongoing strike to return to work. According to Reuters, police armoured vehicles have been stationed near Lonmin’s Marikana platinum mine in an effort to provide security for those who want to return to work.

As quoted in the publication:

It is unclear how many workers will be coming back but the three big platinum firms say a majority of the 70,000 strikers they have contacted directly want to end the strike. ”We are prepared for any eventuality,” Ngubane said, although he acknowledged it would be difficult to provide security for the miners in the shanty towns that ring the main mines. Four miners have been killed in the area over the last three days.

Click here to read the full Reuters article.


Miners to Take Latest Offer Directly to Workers in South African Platinum Strike

Reuters reported today that in the latest development in the ongoing strike by platinum mine workers in South Africa, miners Implats, Amplats, and Lonmin are planning to take their latest wage offer directly to employees, bypassing the Association of Mineworkers and Construction Union. The move comes after talks between producers and the AMCU failed to yield a resolution last week.

As quoted in the market news:

AMCU’s leaders have said they were “arrogantly rebuffed by the platinum cartel”, so it seems unlikely their members will publicly accept the offer at mass meetings which are typically dominated by the union’s shop stewards and most militant core.

But the producers are forcing the hand of AMCU and its president Joseph Mathunjwa by betting that most of the strikers have lost their resolve to strike as they face the third consecutive month without pay.

Click here to read the full Reuters article.


All Talk and No Progress as South African Platinum Miners Meet with Unions

All Talk and No Progress as South African Platinum Miners Meet with Unions

The Easter weekend brought the tabling of a new wage offer for striking South African platinum miners, and since then, talks between the miners and affected companies have resumed; however, so far, negotiations have failed to yield significant results.

Following the renewed offer from platinum miners Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI), the miners met with leaders from the Association of Mineworkers and Construction Union (AMCU) this week in an attempt to come to a resolution, Reuters reported.

The three-month strike has continued due to the AMCU’s demands that platinum-mining companies immediately increase entry level wages to about $1,200 a month before allowances, although the union has recently relented somewhat by saying it will accept incremental pay increases that would see this goal reached within three or four years. Last Thursday’s offer from the three miners ostensibly met this demand, outlining an increase in compensation to $1,200 per month by 2017.

However, that number accounts for allowances such as housing and holiday pay, and the AMCU has been adamant that wage increases should be considered separate from and in addition to these items. Accordingly, AMCU leaders were unenthusiastic about the new offer. Although Amplats and Implats have said that even their latest offer will put a significant strain on their budgets, the miners have not received formal feedback from the AMCU, and neither party has commented on the progress of the talks so far, Business Day Live said.

The AMCU will still have to hold mass meetings to discuss the offer with its members before it can be approved, and since many workers were bussed to their rural hometowns at the expense of the union just before the Easter long weekend, organizing the meetings could prove to be a fairly involved process. Furthermore, as Reuters notes, workers will have to vote on the offer once it is presented by leaders, and there is no certainty that it will pass.

At the expense of the workers

While fair wages are an important consideration in principle, some analysts are looking at the AMCU’s actions as a move towards adaptation in light of the imminent mechanization of platinum mining. Adcorp labor economist Loane Sharp was skeptical of the mining union’s motives, suggesting on Tuesday that, “[a]mcu’s ulterior motive is to price entry-level workers out of the market in order to reduce competition for older, more experienced skilled workers,” BD Live said.

Furthermore, Bernadine de Clercq of Unisa’s Personal Finance Research Unit has taken an uncomfortably realistic view of the workers’ plight, noting that any pay increases will not make up for three months of lost wages. “Their access to future debt will be very difficult,” she told the Times Live. “They will struggle. If they ever recover from this, they will be stuck with a bad payment record. These people will still be hounded by the financial institutions for payment. This debt is going to remain with them for longer and will become more expensive to pay.”

The AMCU has opened a bank account to solicit donations for strikers in debt, but tellingly, Ubank has stopped lending to mineworkers. De Clercq also questioned whether platinum miners will truly be able to afford wage increases and wondered about future job cuts despite resolutions.

What does it mean for the market?

Platinum prices may finally be reacting to the strike. The fact that the end is in sight may mean a drop in prices due to perceived imminent increase in production, although analysts believe that the white metal’s vulnerability towards losses will be short lived. According to Kitco News, platinum prices dropped with gold last Tuesday, but fell even more on Thursday following the offer to platinum mine workers from Amplats and Implats, dipping slightly below $1400 at the start of this week.

Bart Melek, vice president and head of commodity strategy at TD Securities and Yet Edel Tully, metals strategist at UBS both have a keen eye on platinum and are waiting to see if the metal drops further, but Melek also sees strong industrial demand for platinum from European auto producers as well as an improving global economy as supporting platinum prices in the long term. Furthermore, HSBC analyst James Steel drew attention to the current holiday period in South Africa, and stated that,“it takes at least a month for producers to ramp up production and a return to full production would most likely not materialize until July,” Kitco reported.

Between a rock and a hard place

Platinum may see a light at the end of the tunnel, but for platinum miners, the future does not look so bright. Lost revenues are mounting by the second, last clocking in at over 14 billion rand excluding lost wages for workers, and as Lawrence Williams writes in an article for Mineweb, the best option for top producer Amplats may be to attempt to sell its operations.

Williams notes that mechanization of mining at the Rustenburg mine has proved difficult, forcing Amplats to spend extensively on labour intensive methods instead. However, closing unprofitable areas and cutting jobs to save costs would be looked on unfavorably in light of high unemployment in South Africa, meaning that finding a buyer could be an “easy way out,” for the producer.

In any case, struggles for South African platinum seem set to continue. As Platinum Investing News wrote in December and early April, South Africa is not the only miner in the platinum game, and if market demand for platinum continues to hold strong, investors would be wise to start looking to projects and companies in Zimbabwe and elsewhere.

 

Securities Disclosure: I, Teresa Matich, hold no investment interest in any companies mentioned.

Related reading: 

Platinum Price Unmoved as South Africa Strikes Enter Week 11

South Africa: A Dying Star in the Platinum Space?