PLATINUM

First Platinum, Now Gold: As South Africa Miners Strike Spreads, Thousand of Ounces Remain in the Ground

Tyler Durden

Two weeks ago striking miners at Lonmin's Marikana South Africa platinum mine were fired upon by police, killing dozens of protesters in the process. Aside from the implications of what happens when the establishment loses control and desperate workers revolt with complete disregard for their own safety, the strike has crippled the world's third-largest platinum maker, and has cut daily production of the precious metal by 2,500 ounces.

The Lonmin situation remains critical, with just 6% of the South African company's workers turning up for work last week. In the meantime, the strike bug is now affecting Gold Fields, the world's fourth largest gold mine, and costing the company some 1,660 gold ounces of production a day. Now, in addition to the fear of a resumption in money printing by central bankers, the gold price will have to deal with the added fear that supply disruptions may hamper China's stealthy attempts to become the world's biggest holder of physical gold at sub-$2,000 per ounce prices.

Furthermore, it appears that where the striking miners of Lonmin and Gold Fields have gone, many more local unionized workers are set to follow, in the process shuttering the biggest industry in the Southern African nation.

South Africa is the world's third-largest producer of gold (although output has been steadily declining year after year), and the broader mining accounts for just under 20% of the country's GDP.

Should local workers realize the influence they wield in this critical industry, the metal production shutdown will extend. The price of gold will rise accordingly, as fears of a persistent supply contraction coupled with increasing demand from retail and central banks, spread.

source: Zero Hedge