Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports according to Bloomberg.
“Our goal is to coordinate our actions accordingly to expand the markets for realization of these metals,” Russian Natural Resources Minister Sergey Donskoy said yesterday in an interview at a summit of leaders from Brazil, Russia, India and South Africa in Durban. “The price depends on the structure of the market, and we will form the structure of the market.”
South Africa mines about 70 percent of the world’s platinum, while Russia leads in palladium, a platinum group metal used in autocatalysts, with about 40% of output, according to a 2012 report by Johnson Matthey Plc.
Palladium rose 0.8% yesterday to $763.50 after Donskoy’s comments, reversing declines to reach the highest level since March 18. Platinum, used to make jewelry and autocatalysts, has risen 2.3% this year because of increased demand from the auto industry and after supply disruptions at mines. The price jumped yesterday in the hour after Donskoy’s comments, narrowing yesterday’s decline.
South African Mines Minister Susan Shabangu confirmed that the two countries aimed to counter oversupply of platinum, and said possible measures could include taxes and incentives.
No ‘Cartel’
“We’re not really controlling the market,” she said in an interview in Durban. “We want to contribute without creating a cartel, but we want to influence the markets.”
Other producers will be invited to join the bloc, which will be similar to the Organization of Petroleum Exporting Countries, Donskoy said. The aim will be to open up new markets rather than limit exports, he said.
Zimbabwe, Canada, and the U.S. are among other major platinum group metals producers.
Russian and South African officials signed a memorandum of understanding today to cooperate in the industry.
“We are now forming working groups to work out joint actions on this market,” and aim to coordinate export volumes, Donskoy said. “There will be a meeting in the summer to discuss mechanisms in detail.”
Anglo American Platinum Ltd is the world’s largest producer of platinum, while Russia’s OAO GMK Norilsk Nickel is the largest producer of palladium globally.
