Strikes Prompt Fears of Rising Platinum Prices
South Africa’s beleaguered platinum mining industry has seen production levels fall as companies and unions go head to head over pay
Fears are growing that platinum prices could rocket if industrial disputes in South Africa, which accounts for 80 percent of the world’s platinum supply are not resolved soon.
Three of the largest producers, Lonmin, Anglo American Platinum and Impala Platinum have seen a total of some 80,000 miners down tools since the beginning of the year in disputes over pay.
The worst affected has been Lonmin, owners of the Marikana Mine, where once again the industrial action has led to deaths and violent clashes.
Lonmin has seen a 43 percent drop in its production, which it revealed in its half-year financial statement last week.
Chief Executive Ben Magara warned a restructuring and job cuts were inevitable given that some its shafts had already been loss making before the dispute, but the strikes had made the need more urgent.
Analysts agree that so far stockpiling, recycling and long production times have prevented the strikes from causing a spike in global prices.
However, if the issues are not resolved soon price volatility will hit and ultimately make an impact on platinum users such as the automotive industry and other sectors.
While the three companies involved will not reveal their stockpiles it is believed that most platinum producers hold up to four months’ of stock.
Latest figures for recycling of platinum also shows a significant rise from 2003 when just 645,000 ounces were recycled to 2.1 million ounces last year.
However, even if the strikers do now return to work it could take as long as six months for the mining companies to ramp up their production.
Lonmin had hoped its strikers would return to work last week after taking its wage offer directly to its employees, sidestepping the Association of Mineworkers and Construction Union.
An offer of a miner’s basic monthly salary package rising to R12,500 by July 2017 has been rejected by workers who are demanding the deal takes effect immediately.
Two mine workers were killed attempting to return to work, which prompted calls for the South African Government to step in and take action to resolve the dispute and prevent violence escalating as it did two years ago when 44 mineworkers were killed and a further 78 injured in the so-called Marikana Massacre.
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.