1.During the previous year the general investment climate in Southern Africa never really lived up to  expectations. Stocks of course had o...

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Retired but always looking for new challenges.

Friday, February 1, 2013

Miners Dilemma !

PRECIOUS METAL MINERS have had to deal with unexpected circumstances of late in our country,South Africa and the rest of the world. See article below Notes and Alerts .
ALERT Day 20
SIBANYE mine has closed a shaft at the Beatrice Mine after a fire broke out there.The falling gold price has not helped matters .Now seperate from GFI it is mineral rich and consists of the older parts of the then GOLDFIELDS CONGLOMERATE.Sure its gold is expected to run out around 2030,but in the meantime it will produce good dividends.
ALERT Day 8.
25%OF SOUTH AFRICAS working population is either directly or indirectly dependent on mining,states Anglo American for their income.

NOTE 1.The newest update of the pages above is at the bottom of the index list above
NOTE 2.See above Naomi has updated her analysis

Both Platinum and Gold mines should be making a great recovery now as the share prices of other types of mines and industries recover as the world emerges from the long recession,but they are not.
The question should be asked why?
Well Gold has not as many industrial uses and is more a store of wealth to be held in times when the ecomonies are suffering.
Platinum group metals on the other hand are both in demand as precious metals and have a myriad of industrial uses.
So why is the Platinum price not increasing at a greater pace than it did after the last recession in the ninety nineties?In fact it is struggling to increase at a pace greater than the gold price.The platinum price is now around $1700 as is gold.The price after the last recession reached $2200 per ounce!
The answer is that then there was absolutely no platinum recovery process  in place.Now there is a recovery industry which collects scrap platinum metal from spent catylitic converters. The recovery rate is above 90%.This can then be sold to the users at a price well below the newly mined platinum price.
Palladium and rhodium can also be recovered but as they are not such a threat as the scap platinum recovery is to newly mined platinum.
Rising costs and inflation has rendered about half the platinum group mines unprofitable.Many of the gold producers are suffering a similar fate. See the latest update in the index above on 12 feb 2013.