Platinum Mining Industry

1039 Words5 Pages
Platinum is regarded as a precious metal which is part of the platinum group metals. The other metals in this group include palladium, ruthenium, iridium, osmium and rhodium. Metals in this group are pure, have high melting points and can remain stable at high temperatures. They are also resistant to corrosion and have favourable oxidation and reduction properties (The Platinum Market 2011). Since platinum was discovered in Klerksdorp in 1906 (Dan Oancea 2008), South Africa has become the world’s leading producer of this rare mineral, accounting for 80% of the world’s platinum reserves. Recently however, there had been disruptions in the platinum mining industry which saw strikes in the industry affecting not only the mines but also the…show more content…
This figure was seen as inadequate by mine workers in the platinum mining industry. Approximately 70 000 workers belonging to the Association of Mineworkers and Construction Union (AMCU) then went on strike demanding their wages be increased to R12500 per month. For the platinum mining companies involved this demand was seen as unrealistic as platinum would have had to be sold at a higher price than when the strike began in order for the platinum industry to break even. When the strike occurred the supply of platinum decreased which essentially resulted in the scarcity of the metal. As mentioned previously when there is a shortage of a particular product, the price of the product will increase. This can be seen in the graph below. The strike in the platinum mining industry caused a decrease in supply and a shift of the supply curve to the left. This also meant in a shift of the equilibrium price and quantity resulting in an increase in the price of platinum and a decrease in the quantity demanded of…show more content…
Impala Platinum and Lonmin saw it’s stocks fall by 11% and 21% respectively. In contrast, Anglo American Platinum’s stock increased by 9% throughout the duration of the strike. During the strike platinum prices increased by 6% on a global level. Prices decreased in June when negotiations for a higher wage were close to completion. The strike, which lasted a total of five months, affected 40% of the world’s production of platinum with the three main producers losing a combined total of R24 billion in revenue by the end of the strike. The platinum industry also lost around 1.2 million ounces of platinum
Open Document