A plan by the Zimbabwean government to sieze control of mining companies could be good news for platinum and palladium, traders and analysts say.
Double-edged sword for Zimbabwe miners
Few companies would choose Robert Mugabe as a business partner, but platinum and palladium miners are having to do just that. Although such a move is onerous for the companies concerned, the outlook for the precious metals they mine is much brighter.
As part of the Zimbabwean government's indigenisation programme, mining companies have 45 days to come up with plans to allow the government to take controlling stakes in them within the next six months, the government-owned Herald newspaper reported on Friday. The precedents are not promising. Zimbabwe's land grab in 2000 led to food shortages and hyperinflation.
Zimbabwe produces 4.5 per cent of the world's platinum and 3 per cent of palladium supplies, according to Johnson Matthey, the world's biggest platinum distributor.
The disasters in Japan depressed the price of both metals, which are used in the production of catalytic converters for cars. Japanese companies such as Toyota have suffered disruptions to their production estimates.
Palladium, currently trading at US$738 per ounce, is also used in mobile phones and computers, while platinum, trading at $1,739 per ounce, is renowned among jewellery makers as a "white gold".
Robin Bhar, a metals analyst at Credit Agricole, said metal markets were waiting to see the outcome of the miners' plans before rushing to conclusions.
"In a market that's fairly supply-constrained going forward, obviously this news isn't going to help," he said.
Jeff Rhodes, the regional chief executive and global head of precious metals at Intl FC Stone, a commodity trading and advisory company, said there would eventually be higher demand for precious metals.
"As the recovery kicks in you'll see much higher prices," Mr Rhodes said.
"At some point this year, we expect to see platinum north of $2,000 per ounce and palladium above $1,000 ounce."