| JOHANNESBURG/LONDON Sept 5
JOHANNESBURG/LONDON Sept 5 South Africa's
platinum producers may have been the unintended beneficiaries of
deadlocked wage talks and a strike in the country's gold mines,
but they equally risk losing ground as negotiations show signs
of making headway.
If the bullion strike ends sooner than expected, the
platinum celebration may be short-lived.
The price of the white metal used for making
emissions-capping converters in cars rallied strongly from
mid-July onwards, in part because markets anticipated supply
disruptions in the event the gold strikes spread to platinum.
The National Union of Mineworkers (NUM), seeking wage hikes
of up to 60 percent, launched the gold strike on Tuesday.
The rival Association of Mineworkers and Construction Union
(AMCU), the dominant labour force in the platinum belt, has not
walked out of the gold shafts but wants increases as high as 150
percent from bullion and platinum producers.
"The platinum market is taking a cue from the general labour
situation in South Africa, which is a dominant producer of
platinum," said Grant Sporre, an analyst at Deutsche Bank.
"It's the same unions that are negotiating in the gold
sector as the platinum sector, so if the mood is fairly militant
and fairly uncompromising in one sector, the read-through might
be the same for the other," he said.
Platinum's price, long depressed in the face of
sluggish demand from its key European market, has been rallying
since the South African mining sector wage talks kicked off two
months ago, adding 15 percent over that time.
That helped boost shares of the country's hard-pressed
platinum producers. Their gains have in fact been outpacing the
Anglo American Platinum, the world's top producer,
has soared 42 percent since the start of July, Lonmin
has added 41 percent and Impala Platinum is up 26
It is easy to see why - that is, if you bet the platinum
price will rise on South African supply concerns but ahead of
strikes in the industry, so producers can reap the benefits now.
South Africa accounts for 75 percent of global platinum
output but only six percent of gold production, so the price of
the former is heavily affected by the labour scene and domestic
stoppages, or the threat of them.
Gold's price is far more influenced by changing perceptions
of its status as a safe haven or inflation hedge, while
platinum, with its heavy industrial use, is far more prone to
move on supply concerns.
South Africa lost at least 750,000 ounces of output last
year to strikes, shaft closures and government-ordered safety
stoppages, metals refiner Johnson Matthey said in a report
earlier this year.
The estimate - higher than others - highlighted the gravity
of a wave of illegal strikes, rooted in a union turf war between
NUM and AMCU, that hit the sector last year and triggered
violence which killed over 50 people.
Signs that South Africa's gold strike may end sooner than
expected, with NUM signaling a willingness to lower some of its
demands, have also spilled over into platinum, which fell 2.5
percent on Wednesday, its biggest one-day loss since late June.
"You can in part attribute that to the fact that this gold
strike doesn't seem to have legs," said Matthew Turner, an
analyst at Macquarie.
That may bring relief to gold producers hit by the strike
such as Harmony Gold and AngloGold Ashanti,
which saw their share prices rally over 6 percent on Thursday.
But their gain may herald renewed platinum pain.