Glimmer of hope for platinum
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-