Last week’s decision from the Federal Reserve that would keep interest rates at near zero through 2014, longer than stated earlier, sent commodity markets higher with platinum rising to a two-month high. The prospect of added liquidity to the financial markets is perceived as positive for commodities. In addition, there appeared to be a program of buying platinum and selling gold in expectation of a narrowing of the relatively rare discount to gold. The spread between the two metals fell from a $220 an ounce differential to its current $110 an ounce spread. Platinum has already gained nearly $300 an ounce since late-December lows, some 20%, in a relatively short time and may now be set for a period of correction before continuing to trend higher. But a further move towards $1,650 an ounce may be expected before the market consolidates.

 

The illegal strike action at Impala’s Rustenburg mines continues into its second week.

Some 5,000 workers at Rustenburg walked off on the 20^th of January on a strike for higher wages despite the fact that Impala’s workers were already awarded an 8-10% pay hike in late-2011. Management believes that this employee action is as much about the posturing of a new union group as money. The workers have been formally dismissed for the unauthorized walk-out and will need to apply in order to be re-instated. The Rustenburg operations produce upwards of 20,000 ounces of platinum each week.

 

Anglo American Platinum posted an 8.3% decrease in platinum production from its own mines in the December period, year-on-year, to 453,300 ounces as compared to 494,100 ounces in 2010, and 11.8% below the 513,700 ounces outturned in September. Total refined platinum ounces which include refined metal from joint venture and associate partners also fell in the December quarter to 710,000 ounces, from 646,500 ounces in September, and 872,400 ounces a year ago. Most underground operations were again hampered by an increase in the occurrence of safety-related Section 54 stoppages.   

 

As a result, production from open pit operations, particularly at Mogalakwena, was again raised to compensate for tonnage lost from underground. A better-than-expected contribution from the developing Unki mine also helped production. Unki reached its planned output for the first phase of mining with steady state production of 120,000 ounces of PGMs per annum.

 

Anglo produced a total of 2.53 million ounces of refined platinum in its fiscal year ending December, with platinum sales for the period likely to match management’s earlier projections for a total of 2.6 million refined ounces of platinum.

 

Platinum concentrates produced at Lonmin in its fiscal year ending September were in line with that of 2010 at 719,000 ounces of platinum despite a number of Section 54 work stoppages and a total of ten lost days due to an illegal strike at Karee mine, the largest contributing operation which accounts for more than a third of the company’s outturn. Overall tonnage at Lonmin rose 3.7% during fiscal 2011 while grades fell 5.4% from dilution from higher development activity, poor ground conditions and overall lower yields. Improved production levels were achieved at Karee and also at its ramp-up operations at Saffy and Hossy mines. Increasing contributions from these latter properties and initial production from its new K4 shaft in 2012 will boost production at Lonmin to a planned 950,000 ounces by 2013.

 

In its first quarterly results ending in December 2011, Lonmin reported total platinum concentrates of 186,725 ounces, a 3.5% increase over the same period last year, despite a record number of lost days due to Section 54 closures. Management at Lonmin has maintained projected sales of 750,000 ounces of platinum in its fiscal year ending September 2012.