S.Africa Wage Offer Sees Platinum Drop 2%, Palladium Lose 14-Year High
Thursday, 6/12/2014 15:31
Platinum and palladium prices fall as South Africa's AMCU refers new wage offer to strikers...
PLATINUM prices dropped more than 2% Thursday lunchtime after a wage offer from the world's top 3 mining producers was passed by South Africa's AMCU trades union onto its members, now striking for 5 months.
Palladium prices, which had earlier reached a 14-year high in Tokyo, dropped 4% within seconds of AMCU's statement.
South Africa produces 70% of the world's newly-mined platinum each year.
With some 70,000 miners on strike since January, government mediation failed again on Monday.
Shuttering two-fifths of South Africa's platinum mines, the 21-week strike has already
cost the industry 30% of annual output, the 3 companies said this week.
Thursday news saw shares in Anglo American Platinum (JSE:AMS) and Impala Platinum (JSE:IMP) little changed in Johannesburg, but London-listed Lonmin (LON:LMI) – also party to the "in principle" offer – rose almost 8%.
"It is your right to say no," said AMCU leader Joseph Mathunjwa, taking the offer to his members on Thursday, according to Reuters.
"That's why we brought it to you. This is your time. Tell us which way you want us to go."
Rather than doubling basic wages to 12,500 Rand per month (US$1,200) as the AMCU has demanded since January, the miners' new wage offer beats a previous 10% proposal, but would raise basic wages by only 1,000 per month.
Implats had said Wednesday that a 9% raise demanded by the AMCU for entry-level staff would see labor costs eat the entire sale price of the company's output.
"We need to
dispel the notion that South Africa has price power in the platinum game,"
Independent Online quotes former Anglo American director Michael Spicer.
"[Producers] no longer control the price. It's set for us."
Industrial and auto-catalyst use accounts for some
60% of global platinum demand each year, according to data from refining giant Johnson Matthey.
World demand has risen more than 15% over the last decade, hitting new records in 2013.
European platinum demand for use in auto-catalysts is the single largest component, accounting for more than one ounce in every six consumed last year.
Platinum prices on Wednesday hit a 3-year peak above gold, pushing the spread to $221 per ounce after unwinding
the rare platinum/gold discount seen throughout 2012.
Palladium prices have meantime risen some 16% in 2014, with auto-manufacturers set for record demand according to Bloomberg, even as the South African mining strike creates the biggest shortfall of supply since the turn of the century.
"Morgan Stanley says output deficits will last through at least 2018," the newswire reports.
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