Platinum to Rise on South African Mining Rules, JPMorgan Says
August 19, 2010, 10:09 AM
By Chanyaporn Chanjaroen
Aug. 19 (Bloomberg) -- Platinum and palladium will rise onconcern about implementing changes to mining rules in South Africa, saidIan Henderson, who manages about $7 billion in natural-resource assetsat JPMorgan Chase & Co.
“We’ve been long platinum for a long time,” hesaid today in an interview in London, referring to a bet on higherprices. “It’s not a gem today, but a gem tomorrow.”
Concern about rule changes intensified in recentweeks as Anglo American Plc and Lonmin Plc said the government deprivedthem of mining rights. The ruling party in South Africa, the world’slargest platinum producer, is preparing to discuss mine nationalizationat a congress next month.
“My anxiety is the South African politics,”Henderson said. “The news that came out recently has been unfriendly tomines and confusing to investors.”
The government has upheld its award of someprospecting rights at a mine of Anglo’s Kumba Iron Ore Ltd. unit to acompany whose biggest shareholder has been in business with the son ofSouth Africa’s president. Lonmin in May lost prospecting rights for somemetals to a company led by a former government official who once sat onits board.
South Africa is struggling to draw foreigncapital as investment costs rise because of laws aimed at redressing theinequalities of apartheid that compel the sale of stakes in mines toblack South Africans. The youth wing of the ruling African NationalCongress and labor unions want the country’s citizens to gain morebenefit from its mineral resources.
Stronger Rand
Gains by the South African currency also helpedto increase local production costs, Henderson said. The rand hasadvanced 24 percent against the dollar since the end of 2008.
Platinum for immediate delivery advanced $4.60,or 0.3 percent, to $1,538.85 an ounce at 2:23 p.m. London time, for a 5percent gain this year. Palladium rose $4.65, or 0.9 percent, to $494.65an ounce, up 21 percent in 2010. Both metals have uses from automotivepollution-control gear to jewelry.
The government said Aug. 17 a six-monthmoratorium on processing prospecting applications would go into effecton Sept. 1 as steps are taken to ensure that the system is “clean.”South Africa also plans to clarify ambiguities in mining laws to addressinvestor concerns over awards of rights, Mines Minister Susan Shabangusaid.
The country supplies about four-fifths of theworld’s platinum. Anglo controls the largest miner of the metal, andLonmin is third-biggest.
--With assistance from Jesse Riseborough in London and Carli Lourens in Johannesburg. Editors: Dan Weeks, John Deane.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.