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Platinum prices shot up more than three percent Wednesday after Impala Platinum Holdings Ltd., the world's second largest platinum producer, told buyers April deliveries would be slashed in half because of a strike in South Africa.
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The strike at the Rustenberg mine, which began Jan. 20 and has been declared illegal by a South African court, idled 17,000 workers. Implats, as the owner is also known, fired the strikers but has been hiring back those willing to resume mining.
To date, about 8,368 have been rehired, not enough to resume full production.
The strike, which has been violent with several fatalities and numerous properties vandalized, is opposed by the National Union of Mineworkers. NUM leaders have been calling workers to end the illegal action.
The company, which also produces platinum in Zimbabwe, warned buyers that April platinum deliveries would be cut in half, Reuters said.
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Implats has lost more than 80,000 ounces of platinum since the strike, Reuters said. At current prices that translates into roughly $134.8 million of revenue.
"As long as there are labor issues (in South Africa) and as long as they have continuing power concerns, it's going to be very bullish for platinum and, to a lesser extent, palladium," Graham Leighton, director of precious metals trading at Newedge, told Dow Jones Newswires.
The most actively traded platinum contract on the Comex rose $51 to $1,684.90, a 3.12 percent gain.
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