Politics is shaping world minerals supply and mercantilism – an economic doctrine that encourages each country to fend for itself – is rearing its head. That is the view of DaiEcon Advisors principal Dr David Humphries, as can be read on page 15 of this edition of Mining Weekly. Investors, he says, are feeling short-changed and analysts are expecting capital investment in mining to be constrained. He reports a structural shift in global supply as politics forces cross-border investment to contend with lower-grade minerals and less efficient return on investment. The governments of producing countries, Humphries notes, are restricting imports and demanding domestic value-add prior to exportation.

Credit Suisse commodities research head Ric Deverell sees the global commodities market as being at a “very delicate” and “overly pessimistic” stage. Read on page 15 of this edition of Mining Weekly of Deverell being heartened by the absence of negative economic news from Europe in the last nine months and the apparent improvement of the US economy. But while he sees the pessimism as being overdone, he does not expect commodity prices to be off to the races, but rather to return to their 2002 levels. He believes that the “self- induced” slowdown in China has bottomed and is now beginning to tick up in that contraction is taking place at a lesser rate.

The hard work that the South African platinum industry did in the 1990s had been thrown away, says Cadiz Corporate Solutions mining head Peter Major on page 10 of this edition of Mining Weekly. Platinum companies, he says, have in recent years been giving labour unions whatever wage increase they requested. At the same time, they committed vast amounts of capital to expansion. “Everybody was drinking happy juice,” Major says, adding that, as a result, the industry found itself wedged into a corner when the downturn hit it.

“The ’90s was the golden era. That’s when South Africa had a newly elected democratic government and everyone was in love with everybody.

“The mines just negotiated with labour and government never appeared on the same page as unions and mining companies.

“What the platinum and gold mining industries were doing then was assuring that cost increases were below inflation. All that changed in the new millennium. All the hard work of the ’90s, I’m afraid, has been thrown away,” says Major.

While one product, gold, has been yielding $200/t, the ten platinum-group metals, which are inordinately complex to recover, have been managing only $152/t.

Platinum miners have thus been receiving 25% less than the gold miners for a lot more work.