Time to Buy Platinum Miners, But be Careful Where the Mines Are Located

March 4th, 2012
in other precious metals, miners

In my last article I talked about the risk to miners because of Geo-Political problems highlighted in the Fraser Institute Of Mining Survey.  In it the managers from 802 mining companies from around the world gave their opinions on many things, including what they thought the price certain metals would be as far as 2 years out.

The survey was published in February 2012 but the cutoff date for the input was in December 2011.  Since then there have been some changes, most not boding well for miners.  Platinum, the white gold, has been going up lately.

Two of the countries with the largest reserves have varying difficulties.

  • Zimbabwe is asking (or telling)  the miners to cede ownership portions (also here) of their companies.  This may make it too difficult to operate a mine there.
  • There are also union problems continuing in South Africa, the country with the largest platinum reserves.

Above graph from Wikipedia.  The issue is

  • whether profitability of miners operating in Zimbabwe can be maintained;
  • whether the volume of production of global platinum production will be maintained with the continuing labor issues in South Africa and the Zimbabwe nationalization programs.

Platinum is priced slightly lower than gold at the moment ($1711 gold-$1695 platinum) which is historically an anomaly.  This could change soon.

Is this the time to load up on platinum miner stocks?  Top platinum producing companies are:

  • Anglo Platinum (AGPPY.PK) - mines in South Africa,
  • Impala Platinum (IMPUY.PK) - mines in South Africa and Zimbabwe,
  • Lonmin PLC (LNMIY.PK) - mines in South Africa,
  • Norilsk (NILSY.PK) - mines primarily in Russia,
  • Aquarius Platinum (AQPTY.PK) - mines in South Africa and Zimbabwe,
  • Northam Platinum Ltd (NMPNF.PK) - mines in South Africa,
  • Stillwater Mining Co. (SWC) - mines in North America,
  • Vale - Companhia Vale do Rio Doce (VALE) - platinum mining is a very small portion of company activities,
  • African Rainbow Minerals Ltd (AFRBY.PK) - Primarily South Africa, but is believed to be planning expansion in Zimbabwe, and
  • Eastern Platinum Ltd (ELRFF.PK) - mines in South Africa.

The chart below shows what the managers in the Fraser Institute Of Mining Survey thought the percentage of increase in price of these metals would be 2 years out.


Gold, silver, copper and platinum scored high with them.  As you can see from the chart below, more managers think gold would go up by at least 20% in the next two years than any other metal.

Written by Goldfinger

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