TORONTO (miningweekly.com) – Stillwater Mining, the only US producer of palladium, platinum and rhodium, was unable to gain any ground in talks last week with automaker General Motors (GM), which cancelled a metal-supply contract with the miner last month.

In the meeting, held on August 13, GM officials “made it clear they are not interested in reconsidering the terminated supply contract with Stillwater”, CEO Francis McAllister said.

The contract to supply palladium and rhodium for catalytic converters was cancelled as part of GM's government-funded bankruptcy reorganisation, but the carmaker has drawn criticism for scrapping the Stillwater deal while continuing to buy metal from miners in Russia and South Africa.

“The termination of the Stillwater contract puts good paying American jobs at risk at the same time GM is receiving massive federal government funding of US taxpayer dollars with which GM emerged from bankruptcy,” the company said in a statement.

Stillwater and GM signed an initial supply agreement in 1998, and renewed the deal in 2007.

The contract is valuable to the company because it includes provisions that guarantee a minimum purchase price for palladium and platinum when prices fall below stipulated levels.

McAllister argues that, as GM battled plummeting demand for its vehicles over the last year, Stillwater already agreed twice to amend the agreement to accommodate the automaker's reduced metal needs.

“We were responsive to these requests. Modifications to price guarantees, which GM indicated in our meeting were key for them, had not ever been requested or even discussed prior to the contract being terminated, a point disputed by GM."

However, the company is still able to sell all the metal it produces from its two Montana mines, as well as its recycling business, McAllister said.

Earlier this month, he estimated that at second-quarter metal price levels, the loss of the contract would likely cost the company between $5-million and $10-million a year.

At last week's meeting, GM also “did not exclude the possibility of a future competitive supply relationship”, Stillwater said.

A larger floor-price supply contract that the company has with Ford is also scheduled to expire at the end of 2010.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.