Report: Anglo American proposes to close some platinum mines and sell others in South Africa
Platinum futures have climbed to the highest price in two weeks as investors bet that Anglo American Platinum Ltd, the largest producer of the metal by volume, would reach an agreement with the South African government to close some mines.
The proposed closures would trim global platinum production by about seven per cent and push global supply of the metal below anticipated demand.
Platinum is used in jewellery and in devices that scrub emissions from car exhaust.
Platinum for July delivery rose $US12.40, or 0.9 per cent, at $US1,476.50 a troy ounce on the New York Mercantile Exchange, the highest price since April 12.
The gains came on expectations "of an underlying supply shortfall," said Stephen Platt, a futures strategist with Archer Financial Services in Chicago.
"Platinum has just not had the kind of speculative selloff that either gold or silver had. It's been supported by industrial buying."
Anglo American, which produces about 40 per cent of the world's mined platinum, has proposed to close some platinum mines and sell others in South Africa, in a bid to return to profitability.
The move would eliminate about 14,000 jobs, which has triggered a South African law that requires the cuts be preceded by a consultation period with the company, government and labour leaders.
Those talks are expected to conclude by Tuesday, said the company, which is a unit of Anglo American PLC.
Standard Bank analyst Marc Ground said the talks could result in a deal that keeps some mines open, as South Africa's government seeks to preserve jobs in a key industry.
"The results of the consultation process will most likely involve some compromise on the original plans, which could mean that production cuts would be less severe," Ground said.
Analysts with Barclays expect supply to fall short of demand by 248,000 ounces in 2013.
Much of the deficit comes from Anglo's cut, which, if implemented, could reduce annual mine supply by as much as 400,000 ounces a year.
Platinum is now bid at $1509! It looks like supply demand deficit forecasts are all over the place, from about 250,000 to nearly 1 million ounces. Best bet is usually to take the average. I have a hunch there was a lot of physical buying (for delivery and not just a paper speculation) when the spot price fell into the 1400s range. Anyway, I see the quick return and strengthening of the price of Platinum as good news for us PLG longs.