South African Government, Amplats & Unions To Meet Wednesday
The Sunday Independent in South Africa has announced that a major meeting is to take place on Wednesday or Thursday, organized by the Department of Mineral Resources, bringing together unions and all platinum producers. The department has yet to comment on the upcoming meeting, there have already been several high-level bilateral discussions between the government, the ruling party, labor and the mining sector as part of “a desperate scramble” to “put a lid on the damaging economic and political fallout from Anglo American Platinum’s proposed restructuring plan which is to lead to the loss of 14,000 jobs.
The platinum sector thus will remain under production pressure which will lead likely lead to a “turning back of the clock” in precious metals prices as platinum corrects upwards, leaving the other metals behind. According to their CEO, the company must “take drastic and significant action to save the company.”
Essentially, we’re looking at a way of bringing the platinum price up above $2,000, and it does not matter at what cost, whose jobs or lives. New car registrations in Europe fell 8.2% in 2012, the biggest year-on-year decline in 20 years. Morgan Stanley expects volumes to drop another 4% this year before perhaps recovering 2%-3% in 2014. Without political and social turmoil, disrupting the current status quo in the industry, there would need to be a “substantial recovery in demand” from the European car sector, according to Morgan Stanley.
This last week platinum price rose 2.8% this week in the wake of Amplats announcement. Further, it looks like Amplats is determined to follow through with the cuts as it will help their bottom line. If Amplats goes through with the restructuring, “in the face of government and union opposition, we would expect other operators to follow suit,” according to ratings agency Fitch said it in a statement.
In 2010, Amplats had raise R12.5bn from shareholders, cut 19,000 jobs, halt its dividends to pay off debt and cut costs in the aftermath of the global financial crisis..Platinum production increased by 18% a year, said Roger Baxter, chief economist at the Chamber of Mines.