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North American Palladium Ltd. Message Board

  • bigsee4c bigsee4c Nov 20, 2013 1:37 PM Flag

    South Africa

    The wage negotiation situation seems too quiet at the moment for a strike to be on the verge. Eskom's loss of a generator, though, if prolonged, could support PGM prices.

    Rueters
    "Mining stocks and manufacturing shares could come under more pressure on Wednesday after electricity utility Eskom declared a power 'emergency' after the market closed, and said it was reducing supplies to key industrial customers. The spot price of platinum rose 1 percent, although top world producers Anglo American Platinum and Impala Platinum said it was too early to tell what the impact would be on their production."

    Re. btumineral's question yesterday, one tool that the mining companies, particularly Amplats and Implats, are using in the wage negotiations is the threats of more lay-offs. They are basically saying if you push too hard for higher wages, then we will be force to close more underproductive shafts and lay off workers. Implats delayed a planned closure that was to happen mid-year, in part, after seeing how long and difficult it was for Amplats, but also in part so it might be used to force a choice from AMCU -- wages or lay-offs.

    While some on this board do not see much connection to issues in SA, PGM prices, and PAL PPS, I do. I believe that the plunge yesterday would not have been nearly so deep had Pd continued rising above 750 rather than retracing to 715. Had the sector strikes or electricity crisis come in the summer, as many analysts expected, NAP would not be facing as dire of a situation today. But neither happened. A surge in PGMs isn't going to mitigate NAPs cash bridge needs now, but it would help them make the covenants, provided financing can be obtained.

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    • "the mining companies, particularly Amplats and Implats, are using in the wage negotiations is the threats of more lay-offs. "

      this is Labor Negotiations 101 ..... the first week of class.

      in other words.....the mining companies are claiming they are almost doing "charity work" by keeping uneconomic pgm mines operating.....but the "greedy, heartless" mining workers fail to see what good guys Implats and Lonmin and Anglo American and Glencore/Xstrata are.....

      btw you say the SA mining workers are getting about $750 per month....how much are the PAL mining workers earning per month?

    • Well, I don't know that I would agree that focusing on South Africa, Russia, or PGM pricing would be a particularly good idea. When senior management has a fully operational mine producing product in an economical fashion they can do that but to focus on that when significant operational and financial problems exist it indicates a desire to be carried along by higher prices or a narrative rather than operational excellence.

      Longer term, supply adjusts to demand. If PAL can't get their costs down, they will die.

      • 2 Replies to cohsgrad
      • "Well, I don't know that I would agree that focusing on South Africa, Russia, or PGM pricing would be a particularly good idea. "

        I have been saying for a long time that what happens at Thunder BAy is more much important than what happens in SA, Russia or PD market.

        PAL cannot change any of the above. Concentrate on steadily rising production. PGM will do what they will do.
        Meanwhile by-product prices remain severely depressed with Cu and Ni at multi-year lows. AU -30 and Pt -20 today.

      • "it indicates a desire to be carried along by higher prices ..."

        Yeah, maybe there is truth to that. Beggars can't be choosers. At this point I wouldn't mind if PAL were to be carried along by higher PGM prices, so that they can at least have a chance to get their operational act together. PGM prices matter hugely when cash flow is this much of an issue. $760 Pd. would in the neighborhood of twice the operational cash flow of $680 Pd. Financing is no doubt the first priority. I can worry about longer term excellence once we (if we) get through the short term storm.

 
PAL
0.265+0.009(+3.56%)Aug 22 4:00 PMEDT

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