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.
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.