The “BRICS” nations (Brazil, Russia, India, China, South Africa) held a conference in Durban, South Africa last week to discuss areas of common concern, and the Russian Natural Resources Minister and South African Mines Minister took the opportunity to to sign a framework agreement that analysts have dubbed a “Platinum OPEC.”
South Africa produces 80% of the world’s platinum, with Russia second at 13%. Russia is also the world’s largest producer of palladium, with 40% of global production. “It can be called an OPEC,” Russian Natural Resources Minister Sergey Donskoy said, according to Bloomberg. “Our goal is to coordinate our actions accordingly to expand the markets. The price depends on the structure of the market, and we will form the structure of the market.”
His South African counterpart, Susan Shabangu, downplayed the OPEC image. “We’re not really controlling the market. We want to contribute without creating a cartel, but we want to influence the markets.”
South Africa has been rocked by labor riots at platinum mines, as the global price for the metal has dropped in recent years, and increasing costs, including labor and electricity, threaten the entire sector. Amplats, the world’s largest platinum miner, had to deal with a virulent backlash by unions and government officials after announcing that money-losing mines would be shut down, eliminating 14,000 jobs.
Russia and South Africa hope to influence the amount of platinum group metals on the global market, in order to support a minimum price that would make their mines viable. The price of platinum recently fell below that of gold once again, underscoring the tight margins the industry is working under.
Russian and South African officials are planning to meet this summer to work out details of the consortium.