goldmoney.com / By Roman Baudzus / December 21, 2012
South African platinum producers are already enduring significant production drops caused by the massive strike activities among mining workers. Now that the situation is somewhat back to normal, the government led by the African National Congress (ANC) is upsetting companies and markets with its plans to introduce legal changes.
As if the sector wasn’t already burdened enough by the striking activities – which carried on throughout the first half of this year and almost all through the summer - Jacob Zuma’s ANC government is planning important legal changes which could especially weigh on the platinum sector. South Africa should for once and for all become aware that with such richness in natural resources the country has enormous advantages when it comes to competing with other regions of the world. Instead of just focussing on the export of gold, platinum or palladium, South Africa should use its resources to stimulate its own industry. Ultimately, and starting next week, the ANC leaders plan to lower the South African platinum export quota. On one hand this will probably boost the platinum price – provided demand doesn’t drop drastically in the face of a faltering world economy. On the other hand this will sour local mining companies’ business.
Investing in mining shares is probably not very lucrative considering the unpredictable character of governments in important producing countries such as South Africa, Zimbabwe, Zambia and other African states. Although earlier plans to nationalise the mining industry have been removed from the South African agenda once Julius Malema, president of the ANC Youth League, was dismissed, now the ANC will force local platinum producers to sell part of their yearly production to the local industry at discount prices.