Now that the dust has settled, and one of the most notable strikes in modern South African history has been wrapped up, it is time to tally the butcher’s bill for the impact that this will have on the short term and long term Platinum Market, worldwide.
The strikes lead to a reduction of supply for new platinum by around forty percent for five months. This served to drive up the current cost of the metal and to create pent-up demand by buyers who were temporarily priced out of the market.
In the short term, the newly increased wages paid to the miners will not have any bearing on the price of the metal. Basic economic demand has created a seller’s market, so the increased overhead will not have a legible impact for well over a year.
As a rare commodity, platinum is routinely recycled. As such, while looking beyond a year there will be a slight increase in the price due to increased overhead, the rapid advancement of the recycling industry and market will negate this. As such, price increases both in the primary and secondary markets will be nearly non-existent and barely differentiated from inflation.
A five-month strike has created what amounts to an once-in-a-lifetime opportunity for investors in this industry. The market will correct, as long-term contracts are hammered out over the next six months to a year.