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SA strike batters Anglo American

Thursday, April 24, 2014 - 01:44

April 24 - South Africa's mining strike is hurting some of the industry's biggest names. Anglo American says its platinum output has slumped, and there's speculation it could pull out altogether. Ivor Bennett reports.

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Three months and counting - the South African mining strike is beginning to bite. Platinum production at Anglo American has slumped nearly 40 percent this year. Falling from nearly six hundred thousand ounces in the first quarter last year, to barely three hundred and fifty thousand now. Workers are demanding higher pay - with seventy thousand still on the picket line. Talks aimed at ending the strike are resuming. But Nicholas Brooks from ETF Securities says the issue won't go away. SOUNDBITE (English) NICHOLAS BROOKS, HEAD OF RESEARCH, ETF SECURITIES, SAYING: "It's been going on for a long time and there's no sense that there's going to be a structural resolution to these issues. Even if this incident is resolved, it's very likely that next year it will come back or in six months it will come back." Cost of production is another problem. It's now even higher than the price of platinum itself. Anglo has already started shutting mines to increase profitability. An exit altogether could, it's thought, be next. SOUNDBITE (English) NICHOLAS BROOKS, HEAD OF RESEARCH, ETF SECURITIES, SAYING: "By definition, it's not a profitable business in South Africa at the moment. And it doesn't look as if there's any indication that this is going to change. So I think for a company, when looking at your global operations, it makes a lot of sense to look at a place like South Africa, and make a decision that it's perhaps not a place you want to do business anymore." South Africa accounts for around 70 percent of global platinum output. Anglo American a large proportion of that. With the market already in deficit, any further loss of supply is sure to be felt.

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SA strike batters Anglo American

Thursday, April 24, 2014 - 01:44