“Over the last few days, over 30 people have been killed in violence at Lonmin’s mines in South Africa,” said platinum ETF provider ETF Securities in a statement. “We have seen platinum gain almost $60 an ounce over the last two days alone representing a 3.9% gain in price for the metal bringing it to a 6-week high. Our platinum ETF, PPLT, has spiked to about 3 times the average daily trading volume as investors look to participate in the rally.”
Production for platinum is very concentrated with over 80% of supply coming from South Africa.
“We expect any disruptions in mine supply to have a positive effect on the price of platinum. The all time high for platinum in 2008 was a result of power supply issues to the mines in South Africa,” ETF Securities said. “We again saw a spike in price in January of this year when there was an illegal strike at the Rustenburg mine. Lonmin has publicly acknowledged that output has been severely disrupted but has not yet provided any estimates on the amount of production being lost. Any timescale of resolve at this stage is speculative although we can assume the mine will be out of production for at least the next six weeks.”
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