Johannesburg - Buoyed by the stronger rand price for platinum and signs of an improvement in the global economy, the Lonmin share price touched its highest price this year at R54.39 yesterday just hours before the anniversary of the Marikana shootings that caused shockwaves across South Africa one year ago.
While the trade union movement is in strident disagreement about how to commemorate the anniversary, investors are in agreement that things are looking up for Lonmin.
Yesterday, the Lonmin share price ended the day just under R54, continuing the steady advance it began about three months ago. The recent trading marks a recovery from the sharp decline that began in 2008 and picked up speed in the aftermath of the Marikana tragedy.
While the platinum price has shown limited recovery, mining companies have benefited from the weakness in the rand/dollar exchange rate. The weakness in the rand for much of this year has enabled all mining companies to show profits despite their generally increasing costs and the sluggish platinum price.
Last month Anglo American Platinum (Amplats) reported an 88 percent hike in interim headline earnings thanks to the weaker rand. At the release of the results, Chris Griffith, the chief executive, warned that the industry continued to be in trouble and said Amplats had been bailed out by the currency. The Amplats share price, which had slumped after reaching a 12-month high in January, enjoyed some recovery after the unexpectedly strong interim results. However, yesterday the share closed 3 percent weaker at R378.13.
Analysts told Business Report that while events at Marikana were a concern for investors, the important factor in their considerations was the outlook for platinum demand. “The data is increasingly, but not convincingly, pointing to a pick-up in the global economy, which means a recovery in car sales,” said one institutional manager, adding that the shares had fallen from the demanding levels at which they had been trading a few years ago to justify some buying.
Meanwhile, the National Union of Mineworkers’ (NUM’s) decision not to participate in the Marikana commemoration is an indication that the problems that led to last year’s tragedy are far from resolved.
In a statement issued yesterday it said: “The decision [not to participate] is based on the fact that there was consensus between NUM, Amcu [the Association of Mineworkers and Construction Union], Solidarity, Uasa and other stakeholders including the mining companies that Deputy President Kgalema Motlanthe’s office would organise the commemorations.
“The organisation of the commemoration has been hijacked by the so-called Marikana Support Group and the programme filled with only opposition political parties.” - Business Report