Implats set to cut platinum supplies

Published: 07 May 2014

JOHANNESBURG - World number two platinum producer Impala Platinum, the majority shareholder in Zimbabwe's platinum miner Zimplats, said yesterday that if a 15-week strike continued at its South African operations it would have to cut supply to clients to 40 percent of demand over the next three to four months.

Spokesman Mr Johan Theron told Reuters the company had supplied customers with all of the metal they required until the end of April by drawing on inventories.

But its abilities to meet demand would soon match its production profile, currently 40 percent of normal output.

The wage strike by the Association of Mineworkers and Construction Union has also hit Anglo American Platinum and Lonmin and is the longest and most costly labour stoppage ever on South Africa's mines.

"Customers have accepted lower deliveries, so there is no contractual dispute," Mr Theron said.

"The difference between what we can supply and what they need they can source form the market themselves."

Despite the unprecedented scale of the strike, which has hit 40 percent of global production of the precious metal used in emissions-capping catalytic converters in automobiles, the market's reaction has been muted.

Chamber of Mines of Zimbabwe president Mr Alex Mhembere recently said prolonged labour unrests in South Africa, which have affected production, could push up prices of platinum as the global platinum holdings continue to dwindle.

"While we do not wish anything bad for our neighbours, we believe the situation (industrial action) will remove some of the excess stock in the market and we expect an upturn in prices if the situation prolongs in South Africa," Mr Mhembere said. Prices have averaged $1 472 per ounce this month.

Zimbabwe, which is the world's third biggest producer after South Africa and Russia and has the second biggest deposits, has three active platinum group metal producers Zimplats, Mimosa and Unki, which are units of South African firms.

However, the local miners cannot take advantage of the depleting global stock levels considering that they all do not have idle capacity and anticipate 400 000 ounces this year.

Spot platinum is currently fetching $1 445 an ounce, slightly less than its levels on the eve of the strike by around 70 000 miners, as the market has anticipated that there are adequate above-ground stocks.

Wage talks collapsed almost two weeks ago, setting the stage for a protracted showdown between labour and business on South Africa's restive platinum belt.

AMCU has accused the companies of negotiating in bad faith and manipulating numbers to inflate the costs of higher wages.

- Reuters

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