JOHANNESBURG (miningweekly.com) – Stability can be brought to South Africa’s beleaguered platinum-mining industry by creating a platinum exchange similar to Canada’s successful producer-led potash marketing arm, says Pan-African Capital CE Dr Iraj Abedian.
Abedian, who addressed the Mining for Change 2012 seminar in Johannesburg on Tuesday, says that without a platinum exchange South Africa’s platinum-mining industry will continue to be characterised by boom-and-bust.
He believes that South Africa should create exchanges for all commodities where it is the dominant supplier and holds up Canpotex, a marketing and logistics company that sells and delivers Saskatchewan potash to international markets as a wholly owned entity of potash producers, as a model worth emulating.
Abedian's comments arise at a time when government, business and labour are putting their heads together to arrive at short-, medium- and long-term solutions for the platinum industry, which is ravaged by high costs and low prices.
South Africa’s similarly stricken ferrochrome industry in March called for the creation of a stabilising chrome exchange, also citing Canpotex as an entity worth copying.
Abedian's view is that without the stability of commodity exchanges, national interest, job preservation and investor certainty will continue to be at stake.
Potash-dominant Canada formed the Canpotex potash exchange in 1972 when it was faced with a price crisis similar to the one currently confronting both South Africa’s platinum and ferrochrome industries.
With platinum miners now also mining the upper-group two reef, there is a chrome surplus, which has resulted in ferrochrome producers calling for the imposition of a $100/t duty on chrome exports, as a short-term palliative.
South Africa, as a country, is obliged, Abedian says, to ensure constant access to its metals in cases where it is the dominant supplier.
“For supply, price and employment stability, there’s a need for a producer platform to plan for decades ahead,” he adds to Mining Weekly Online.
Although the South African government can be involved in initiating commodity exchanges, there is no need for it to play a regulatory role.
“There can be voluntary participation by the platinum producers themselves, who then become involved in the synchronisation of supply to match demand,” says Abedian.
He recalls that until the late 1990s, South African gold miners sold their gold to the Reserve Bank, which served as a single channel to market.
Should exchanges be formed, investors would also have to take cognisance of the longer-term nature of their investments.