Russia, South Africa Plan 'OPEC' for Platinum Exports

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The recent meeting of the presidents of the BRICS countries (Brazil, Russia, India, China and South Africa) in Durban, South Africa, resulted in several joint initiatives covering trade and industrial cooperation, plus a range of bilateral agreements between countries that will be developed during the year. One such agreement has been launched by Russia and South Africa to set up a body to co-ordinate platinum exports, similar to the OPEC group of oil-producing countries. The two countries together hold about 80% of global platinum group metal reserves.

South Africa mines about 70% of the world's platinum, and Russia mines about 40% of the world's palladium. Russian Natural Resources Minister Sergey Donskoy said the goal was to coordinate their actions accordingly to expand markets.

"The price depends on the structure of the market, and we will form the structure of the market," he said.

A framework accord was signed and details have yet to be decided. "We are now forming working groups to work out joint actions on this market," Donskoy said. "There will be a meeting in the summer to discuss mechanisms in detail."

Susan Shabangu, the South African Minister of Mineral Resources, said that the plan looked to counter the oversupply of platinum, possibly through taxes and incentives. "We're not really controlling the market," she said. "We want to contribute without creating a cartel, but we want to influence the markets."

The director of the local Department of Trade and Industry said that the grouping would provide access to minerals and incentivize companies to add value locally.

Analysts and industry players had doubts about the plan, mentioning regulatory hurdles and the possible substitution of platinum metals with other minerals as catalysts. Some pointed out price manipulation can have unexpected, negative outcomes.

Platinum use by the auto industry is reported to be down 30%, with no recovery expected soon.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.