Every Friday morning, SAfm’s AMLive’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: The plunge of the platinum price to below $900/oz is putting the entire platinum industry at risk.
Creamer: There is going to be a steady hand to keep this industry going. There is more than a million lives affected here, both directly and indirectly. Below $900, it fell to $893/oz, I see you’ve just announced it at $904/oz, so it is popping up slightly, but not enough at all. This was at the high level of the nine hundreds.
We thought it was going to go into the thousands as it had been, like gold at $1 233, as you just announced this morning. Platinum is rarer than gold; gold is in supply in many parts of the world. Platinum, we have got it, this is our beloved metal here and to see it plunge and the bottom fall out of it is going to create a lot of concern in the industry, because they were already concerned even when it was closer to $1 000/oz.
I can remember not that long ago they pronounced that they needed $1 800/oz. This is half of it now. All the deep, dark and dangerous mines are really at risk and those are the labour intensive mines. We know we had this big five-month strike in the industry in 2012 and it possibly led to some stockpiling, which may be coming through to push the price down. Another big reason is the scandal in the US on the car emissions, the Volkswagen scandal. That has hit the diesel vehicles.
This is not a China story, because this is very much a Eurocentric metal. A lot of that goes into diesel vehicles in Europe and that downturn is also hurting platinum badly. Although we can say it is helping palladium, because it is going to the petrol vehicles, palladium is also in the $800/oz range, so it is not going to help. We sort of think now that the opencast mines, like Mogalakwena opencast mine in Limpopo, they are probably going to be the big survivors, with all their by-products.
What about all the other mines and people? We know that there has been a big push to promote platinum. International Platinum Association was formed. There was such concern around the world that they formed this International Platinum Association and they went from local authority to local authority in Europe saying it is not platinum to blame here. This was a scare story by America and VW sort of fell into a trap of creating nonsense around the emissions. Platinum is suffering for bad reasons. We know that even the mayors of the world’s bigger cities, led by the three times New York Mayor Michael Bloomberg, have been pushing for clean air around the cities.
This, I thought, would be a great boost for platinum. You are seeing every particular promotion is not getting this price up. Even the calls by the World Platinum Investment Council to get people to invest in this, they have been doing a lot of marketing on this. They have been saying that there is a deficit of primary supply.
They don’t know where these stockpiles are. Where are they and who has got them, who is releasing this metal? Also, the recycling of platinum, we would think with the price down there wouldn’t be so much recycling. So, a lot of confusion around this metal that is so important for South Africa. It has got such a good promising future, but the industry needs to really work on this. Analysts are saying not even mergers are going to probably create a solution.
Kamwendo: The forecast fall in the iron-ore price to below $50/t will deal a heavy blow to South Africa’s iron-ore miners.
Creamer: We have just had a new iron-ore mine open in Brits this week. It is going to supply 5-million tons a year to ArcelorMittal and is going to be on the domestic supply. We know we have got Kumba, which is our biggest iron-ore supplier and in 2011 and 2012 it was really humming. It created out of its 6 000 workers pre-tax half millionaires, because they were all shareholders. They got the pay out and it was fantastic.
The cycle was up and many of those workers went out and bought properties, some of them are farmers today, because they went into farming. It has been a fantastic metal, but look at it now. Also, because of mismanagement oversupply. It is going to hurt us in South Africa, but it is going to hurt the Australians much more.
In Australia a few years back, when Joe Hockey was still the Australian Treasury and doing his sums for his budget, he said he is going to be very conservative and price the iron-ore at the lowest possible at $50 per ton. Well, we know that they are now talking $41 per ton. After he was around and even while he was there it fell to $38 per ton. I know that these Australian operators say that they can still cope with that, but brother, it is not going to be the lucrative business that it was and will certainly hurt us here. Among the reasons is this very huge ramp up of Chinese supply.
Kamwendo: Researchers have come up with a new lightweight material that is ten times stronger than steel.
Creamer: They come up with new things that can hurt iron-ore as well, but not hurting it immediately. This is graphene. We know it from our pencils, when we put our pencil down it is a graphite point, but as you push it you are getting the layers of graphene coming onto the paper.
They have now been researching this at the Massachusetts Institute of Technology. They find that its strength is unbelievable, ten times stronger then steel, but almost as light as air. The possibilities are going to be endless if they mix this with other materials. If they put it together with aluminum then 3D printers can give you this in big shapes now and it can actually be a material that can hurt or put other mining emphasis on us.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.