Strikes in South African 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 price by reducing platinum supply? If you are an investor out to buy platinum, read below to understand how the strike impacts 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 the management.
The National Union of Metalworkers of South Africa is a miner's union, and has recently organised a 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 USD 1,062.
These contractors, however, have exploited workers by paying them a fraction of what their other permanent staff earns for performing the same job. By what MUNSA claims, exploitation by contracting companies is an ongoing problem.
Platinum Price in 2022
Currently, the strike by contract workers at Impala Platinum has involved less than 8% of their mining workforce, and was limited to only two of the nine active mine shafts. Investors are worried that this strike could lead to a price hike in platinum.
Since NUMSA only has 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 last year. It is believed that the strike in South Africa will only have a small effect on platinum supplies.
Invest in Platinum
The automotive industry is undoubtedly the most significant global consumer of platinum, where the metal is extensively utilized in catalytic converters for vehicle exhaust systems. With China looking to pump up production of their auto industry, the little impact from Impala Platinum is nothing to worry about.
For clients who are interested in buying platinum bars or coins on the back of this news, there are a number of available options from Suisse Gold. Popular products include investment grade platinum bars, platinum maple leafs and platinum Britannias.