Strikes in South Africa's platinum mines by the metalworker’s union have shaken up the global precious metals market, as the country is one of the biggest producers of platinum. Founded in Johannesburg, Impala Platinum is the second-largest producer of precious metals.
If the ongoing strike begins to worsen, what are the chances of it affecting the platinum supply and consquently price? If you are an investor out to buy platinum, read below to understand how the strike may impact rare metals.
How The Strike In South Africa Began
The main issue brought up by the workers on strike is their exploitation by contractors, which includes a wide pay disparity. As a result, the union of metal workers (NUMSA) hit back hard against management.
The National Union of Metalworkers of South Africa is a union for the mining collars, quite recently going on strike at the Impala Platinum mines. According to NUMSA, a rock drill operator that is employed on a permanent payroll by Impala Platinum should earn around USD 1,062.
These contractors, exploit the workers by paying them a fraction of what their other permanent staff earns for performing the same job. By what MUNSA claims, this exploitation is ongoing.
Platinum Price in 2022
Sources claim that the strike by contract workers at Impala Platinum involved less than 8% of their mining workforce, and that its was limited to only two of its nine mine shafts. However, investors are worried that this strike could lead to a price hike in platinum, where the metal is already undergoing a tough time on global markets.
Since NUMSA only provides 3,000 members out of the mine’s total workforce of 45,000, experts claim that the strike's impact will be limited. The impact is said to only halt production at two out of three smaller, high-cost, large operational shafts where the contractors mine.
The Rustenburg mine, where the strike is taking place, accounts for almost half of Impala Platinum's output of 2.93 million ounces of platinum that was mined last year. Though platinum group metals (PGM) prices are below previous highs, the strike in South Africa are unlikely to affect current market prices or supply.
Invest in Platinum
The automotive industry is undoubtedly the larger global consumer of platinum, where the metal is extensively used in catalytic converters for vehicle exhaust systems. With China looking to pump up production for their auto industry, the little impact from Impala Platinum is nothing to worry about.
Conclusion
When one of the largest suppliers of platinum is faced with worker disputes amidst production, investors will likely begin to feel the fear of a price surge. However, it is only a matter of time until the dispute between the mine workers and contractors for organizations like Impala Platinum is solved.
