Platinum, Palladium Prices Soar amid Supply Concerns
A 17-week strike at South Africa’s PGM mine has caused Platinum and Palladium prices to skyrocket to the highest levels in three years
News of renewed violence in South Africa have caused platinum and palladium prices to climb nearly 16 percent this year. On Thursday, prices for the precious metal were at their highest levels since August 2011.
Metal analysts said palladium prices could continue to rise, possibly reaching the $860 an ounce area, which would be near the February 2011 high on a continuation chart. Platinum for July delivery rose 1.2 percent to $1,493.10 a troy ounce, the highest since Sept 2013.
A huge factor for the increase in price can be attributed to the ongoing strike. Since January 23, over 70,000 workers from the world’s three largest platinum and palladium producer, Anglo American Platinum, Impala Platinum and Lonmin have been on strike. South Africa’s labor court said earlier this week it would mediate fresh talks between the mining companies and workers’ unions as workers are seeking higher wages, which the companies say they can’t afford. The talks have been ongoing for weeks without success.
"There is a great deal of uncertainty in these markets right now, and that's pushing prices" higher, said Peter Hug, global trading director at Kitco Metals.
Roughly 10,000 ounces of platinum production and 5,000 ounces of palladium are lost each day the strike continues, costing the industry $1.8 billion in lost revenue. South Africa supplies approximately a third of the world's palladium and 80 percent of its platinum.
With the stoppage in production causing prices for the metals to soar, many market analysts believe it has potential to run higher.
One of the principals with LOGIC Advisor, Bill O’Neill, disagrees. He said short-term chart indicators suggest palladium may be overbought and if an agreement is made between the workers’ union and the mining companies, palladium will see a correction.
“The thing about strikes is that when they reach a resolution, markets can slump very quickly,” Smith said.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.