Stillwater says floor unlikely in new Ford deal
NEW YORK (Reuters) - Stillwater Mining Co (SWC.N), North America's top platinum group metals producer, said on Wednesday its new supply agreement with Ford Motor Co (F.N) will be without a guaranteed floor price.
The current PGM supply contract between Stillwater and Ford, which will expire at the end of the year, includes minimum prices for the metals, and that benefits Stillwater because of increased certainty in its revenue.
"Unless the market changes more dramatically, it is unrealistic to expect that we will get equivalent floor prices," Gregory Wing, Stillwater's chief financial officer, said at the Reuters Global Mining and Steel Summit in New York.
Year to date, palladium prices are 13 percent higher, easily outperforming gold, silver and platinum, due to optimism about the recovering auto industry and strong investment interest.
PGMs include mainly platinum and palladium and rhodium. The majority of the world's PGMs supply is consumed by the auto industry for use in catalytic converters that clean exhaust fumes.
Wing said that the negotiation with Ford was still at its beginning stage.
"I think that there will be a supply contract. Do we feel compelled to have one in place by the end of 2010? No, not necessary," he said.
Wing said the company prefers to have supply agreements with buyers, but Stillwater could sell its output solely in the open market if the terms are not competitive.
A Ford spokesman said the company had no comment at this time.
In July, Stillwater said it lost a supply contract with General Motors under the carmaker's bankruptcy petition.
In addition, Wing said the company's recycling business, which focuses on spent catalytic converters, will continue to contribute to Stillwater's sales.
Montana-based Stillwater, which operates the biggest PGMs reserves outside of Russia and South Africa, said it produced 529,900 ounces of palladium and platinum in 2009, an increase of 6.2 percent compared with 2008.
Palladium XPD= traded at $461 an ounce on Wednesday. On Monday, palladium hit $477, its highest level in more than two years.
(Reporting by Frank Tang, Matt Daily, Michael Erman, Dana Ford, Steve James, Ernest Scheyder, Carole Vaporean; Soyoung Kim in Detroit)
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