Platinum led the precious metals gaining over $15 per ounce while the world’s largest platinum producers batting ongoing wage disputes with South African unions.
Unions led strikes are threatening to stop 70 percent of the global production over pay demands after the Association of Mineworkers and Construction Union (AMCU) rejected offers by the mines to pay offers toping South Africa’s six percent inflation.
Lonmin PLC, Impala Platinum Holding Ltd. and Angel American Platinum Ltd. employ over 150,000 workers and contractors.
The industry’s stability is in question because it will be difficult for the mines to offer more do to rising costs and platinum’s fall from it’s high this year of $1,744.5 per ounce. Impala Platinum Holdings reported a 76 percent decrease in profits, while the other two producers each reported losses larger than years prior. It is looking as if producers are willing to take the chance with a protracted strike given that the AMCU is demanding wage increases exceeding more than double of what miners offered.
Production costs soared over 20 percent for Impala due to labor expenses and lost production due to strike. The average entry-level wage for a platinum miner worker is 8,700 rand, or $850, per month. The AMCU is looking for a basic monthly pay of 12,500 rand, before benefits that were already issued prior to the strike including pension contributions.
Although a reduced supply of platinum would help boost platinum prices, Standard Bank Group said that the strike would not immediately support prices because producers have roughly a month’s worth of supply on hand for cases like this.
The large downward trend is seen on the daily chart, while price action has seen support around $1,450 per ounce. However, resistance is floating at the 200 EMA, currently at $1,480 per ounce. The ADX is showing a moderately weak trend that supports the ranging price action between $1,450 to $1,480. The +DMI is indicating that the trending is still bullish, while the RSI has increased steadily to 58.