Glim­mer of hope for plat­inum

Finweek English Edition - - FEEDBACK -

The grow­ing in­ter­est in Absa Cap­i­tal ’s plat­inum- backed ex­change-t raded prod­uct – known some­what con­fus­ingly as NewGold’s Plat­inum Deben­ture (NewPlat) – is a dou­ble-edged sword.

On the one hand, it is a re­mark­able bit of op­por­tunism for Absa to have spot­ted the po­ten­tial in a plat­inum ex­change-traded fund. So far, some 70.4m deben­tures have been is­sued ref­er­enc­ing about 702 725 ounces of plat­inum. That is equal to 17% of SA plat­inum pro­duc­tion last year, which to­talled 4.1m oz. So, well done to Absa.

The bad part of the suc­cess of the deben­ture is that it also recog­nises the deep-seated con­cerns which in­vestors have for the SA min­ing in­dus­try.

While de­mand for plat­inum is ex­pected to trend promis­ingly up­wards in the lat­ter half of 2014, it’s the sup­ply side of the equa­tion that is the big­ger in­flu­ence on the pop­u­lar­ity of the deben­ture.

SA con­trols the mar­ket for newly mined plat­inum, with re­cy­cling and in­vest­ment in­ven­to­ries also hav­ing a ma­jor bear­ing on where the price of the metal is head­ing. The ex­pec­ta­tion is that plat­inum pro­duc­tion from SA will con­tinue to be un­pre­dictable; and most prob­a­bly down­wards.

The strike at An­glo Amer­i­can Plat­inum (Am­plats) is a case in point, with the As­so­ci­a­tion of Minework­ers and Con­struc­tion Union (AMCU) show­ing no in­ter­est in back­ing off from de­mands that Am­plats re­visit its much re­vis­ited re­struc-

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