Prices for platinum and palladium are poised to rise, according to JPMorgan (NYSE:JPM), citing the implementation of new mining rules in South Africa.
The new rules transfer some rights at mines to black South Africans. With the son of the South African president being connected to the largest shareholder in Kumba Iron Ore LTD., which had some of the rights of the mine transferred to them, it undermines the assertion it's for the purpose of redressing what is being called "inequalities," related to apartheid years ago.
Consequently, the uncertainty related to these political moves has caused potential investors to hold back until more clarity about the mining laws of the country is made, and ultimately laws put in place that can also be counted on by investors to make intelligent decisions upon.
Even worse, is the upcoming congress next month in South Africa, where the ruling party is beginning talks on nationalizing the large mine next month.
Already Anglo American Plc and Lonmin Plc have complained about the government taking away their mining rights.
This uncertainty is sure to drive up platinum and palladium prices in the near future,
Mines Minister Susan Shabangu said the nation will work on clarifying all the uncertainties surrounding the changes, especially investor concerns over the awarding of rights, which could change the entire picture as far as return of investment if leaders arbitrarily award others the rights in relationship to internal political considerations.
1 comment:
"This uncertainty is sure to drive up platinum and palladium prices in the near future"
...especially so for platinum, where South Africa accounts for over 80% of world supply.
We see this is a short term piece of good news to add to the strong long term fundamentals behind these two metals.
Regards and good investing!
MyCommodity.com
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