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Half of global platinum mining production could be affected by the strikes



Commerzbank commodities research

Commerzbank commoditiesIn all likelihood, South Africa will face strikes in the platinum mining industry next week. By its own account, the radical AMCU union, which represents the majority of South African mine workers in the platinum industry, will on Monday be issuing an official note to this effect to Lonmin, the world’s third-largest platinum producer. Unless the company submits an improved pay deal, workers will go out on strike there from Thursday. The AMCU’s members have also spoken out in favour of strikes at Impala Platinum, the world’s number two. A vote on whether to call members out on strike at Anglo American Platinum, the world’s largest platinum producer, is to be held at the weekend. Last quarter, the AMCU had already been given the go-ahead to strike by the state mediation authority, but has not taken any action so far. The union is demanding that wages be doubled.

According to industrial sources, up to half of global platinum mining production could be affected by the strikes. The platinum price responded hardly at all to yesterday’s announcement by the AMCU.

Given that Johnson Matthey estimates that the global platinum market showed a high 605 thousand ounce deficit last year and that this is unlikely to change significantly this year – depending on investment demand – we see catch-up potential for the platinum price.

What is more, the price is attempting to gain a foothold above the 200-day moving average, which could result in technical follow-up buying.

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