Eddie van der Walt London
THE end of labour strikes in South Africa’s mining industry is increasing rhodium production at the fastest pace in two decades and cutting prices.
The metal, used to control toxic emissions from cars, dropped 35 percent since August to a 18-month low of $965 an ounce, according to data from Johnson Matthey. South Africa may boost output by 25 percent this year after three years of declines, according to the London-based firm, which makes about a third of the world’s catalytic converters.
“Rhodium is looking very bearish,” David Jollie, head of research at Mitsui & Company Precious Metals, said from London on Monday. “Buyers are taking the view that if they wait, prices will come to them.”
While the drop in rhodium, one of the rarest precious metals, has been the most severe, prices for platinum and palladium also fell.
South Africa resumed mine production in June 2014 after the resolution of a five-month dispute that was the longest mine strike in the country’s history.
Platinum for immediate delivery is trading near a six-year low of $1 058.93 an ounce after sliding 11 percent this year. Palladium has lost 12 percent in 2015. South Africa produces more than 70 percent of the world’s mined rhodium and platinum, and almost 40 percent of palladium.
Rhodium output in 2015 will probably exceed demand by the most in four years, according to Johnson Matthey data.
The firm estimates South Africa will mine 584 000 ounces of the metal this year, the most since 2011. Global supply, including recycling, may reach a record 1.06 million ounces.
The decline in rhodium, which wiped out last year’s 28 percent advance, is almost over, according to Deutsche Bank’s Grant Sporre.
Rising car sales and stricter emissions rules would boost demand, he said.
Sales of cars in the US, the largest car market after China, rose last month at the fastest pace since 2005, according to Autodata. – Bloomberg