Platinum, palladium dive as strike turns violent
The price of platinum slid and sister metal palladium dropped back below the $800 an ounce level on Monday after a deal between the world's top producers and workers who have been on strike for 13 weeks drew nearer.
On the Comex division of the New York Mercantile Exchange, platinum futures for July delivery – the most active contract – in afternoon trade exchanged hands for $1,419.80 an ounce, down nearly $5 compared to Friday's close, but well off the day's lows.
On the day before more than 70,000 South African workers went on strike at Anglo American Platinum (LON:AAL), Imapala Platinumm (OTCMKTS:IMPUY) and Lonmin (LON:LMI) which together account for almost 50% of the world's production, platinum was trading at $1,450 an ounce.
Palladium also eased back on Monday with June futures slipping back below $800 an ounce, touching a low for the day of $794.50 and trimming its strike-related gains to just over 10%.
Production of the metal, often used as substitute for platinum in catalytic converters, is even more concentrated than platinum, with South Africa and Russia controlling more than 80% of global supply.
Roughly 10,000 ounces of platinum production and 5,000 ounces of palladium are lost each day the strike drags on.
Reuters reports after talks between the major union Amcu and management collapsed on Thursday, producers decided to take the latest offer directly to workers.
Producers latest offer would push the basic salary of all underground workers to R12,500 ($1,100) a month by 2017. The union has been calling for an immediate doubling of the minimum wage to R12,500, guaranteed for three years.
Business Day reports the union’s leaders were reluctant to take the latest offer back to their members — "probably because they feared the rank and file would accept it after three months with no pay":
"A typical South African mine-worker has eight dependants, and often two families, one in his home village and the other near the shafts. That means many of them are now near breaking point, especially as domestic inflation accelerates."
The three mining companies have so far lost a combined R15.2 billion ($1.4 billion) in revenue, while lost employee earnings come to R6.7 billion ($630m).
As an indication of how dire the situation for workers in the platinum belt has become, Eye Witness News reports "in a remarkable case of public disorder," around 4,000 people gathered near a shopping centre not far from Implats' number nine shaft in the town of Rustenburg at midnight Sunday shortly after a nearby community hall was set alight, and looted the entire complex.
Image from Youtube file footage