High wages driving away investors?

News Update as @ 1530 hours, Thursday 5 June 2014Feedback: [email protected]: [email protected]

By Tawanda Musarurwa

Prevailing high wages have an effect of pushing away potential investors in labour intensive industries, a labour expert has said.

Industrial Psychology Consultants (Pvt) Ltd managing consultant Memory Nguwi said the effect of compelling companies to pay Poverty Datum Line (PDL)-linked wages had the detrimental effect of mak-ing Zimbabwe an unattractive investment destination.

He said the move to link wages to PDL at a time when national income was per-forming below par was 'unprecedented'.

"A high wage economy militates against those investors who are targeting labour intensive industries. Where investors have no option they normally resort to auto-mation to reduce the impact of wages.

Where they have options they move to lower wage economies where they can produce competitively. "In developing countries people aspire for PDL linked wages but it’s not practical considering the levels of productivity. The Government’s move to pay minimum wages linked PDL when Government revenue is dwindling is an experiment never seen anywhere in a normal world."

The country's National Employment Councils (NECs) have been pushing firms to adjust wages to the PDL, which is around $550 for a family of six.

But industry says this is unrealistic in view of depressed capacity which cur-rently stands at 39,6 percent. Cooking oil producer Surface Investments chair-man Narottam Somani recently said his company cannot afford PDL-adjusted salaries. "Workers demands US$600 per

month, while the company cannot even pay US$300, and still we are pushed to negotiate. "Let us not expect the country to afford to pay the highest salaries in Southern Africa. We are now dealing in US dollars," he said.

However, Reserve Bank of Zimbabwe senior division chief (economic research and policy enhancement) Simon Nyarota told industrialists at a Confederation of Zimbabwe Industries event that it is a misconception to use the PDL for a fam-

ily six when negotiating for a minimum wage. He said it would be appropriate to use the PDL for a single individual which is calculated by the Zimbabwe National Statistical Agency at around $150. Zim-babwe's labour market environment is borne out in the level of companies that have embarked on down-sizing exercises.

Official figures from the Ministry of Labour and Social Services indicate that 2 376 workers lost their jobs in 2013 after 165 companies embarked on staff rationalisa-tion programmes.

The numbers show that although retrenches went down to 2 376 in 2013 from 4 007 in 2012, the number of companies downsizing maintained an upward trend. Last year 165 compa-nies retrenched their workers compared to 147 companies which retrenched in 2012, as viability challenges persisted. •

High wages driving away investors

2 NEWS

BH24 Reporter

Capital Bank has sunk under financial insolvency, voluntarily relinquishing its licence just a few weeks before all banks were supposed to submit their comprehensive recapitalisation plans to the Reserve Bank of Zimbabwe.

In a statement yesterday the central bank's Registrar of Banking Institutions said it had cancelled Capital Bank’s licence following a request by the bank-ing institution.

"The Registrar is satisfied with the rea-sons for the request and that the can-cellation will be in the best interests of the Capital Bank's creditors, depositors and members.

"The bank has been operating in an unsafe and unsound financial condition characterised by critical under capitali-sation, persistent losses, chronic liquid-ity challenges and inordinately high lev-els of non-performing loans," said RBZ.

The cancellation comes just four weeks before all banks were supposed to present their comprehensive recapital-isation plans to the banking regulator.

In January, then acting RBZ governor

Charity Dhliwayo announced (in her Monetary Policy Statement) an exten-sion of the deadline for banking insti-tutions to comply with the $100 million minimum capital thresholds to Decem-ber 2020.

But she said all banks were now required to submit "comprehensive recapitalisation plans" by June 30, 2014.

"Capital requirements remain at cur-rent levels of US$25 million for com-mercial banks, US$25 million for Mer-chant Banks, US$20 million of Building

Societies, US$15 million for discount and finance houses and US$5 million for microfinance banks.

Nevertheless, compliance with Cabinet approved levels have now been moved to 31 December 2020.

"In this regard, all banking institutions are required to submit to Reserve Bank, comprehensive recapitalisation plans to meet the new deadline, by 30 June, 2014," she said.

The closure of Capital Bank also appears to mark the end of its fraught relationship with majority shareholder, National Social Security Authority (NSSA), which began in January 2012 when the authority acquired Renais-sance Merchant Bank (RMB) (now Capital Bank) and controlling stake in Afre Corporation (First Mutual Ltd).

"While the institution is undercapital-ised, the major shareholder, National Social Security Authority, is no longer willing to inject additional capital into the bank," reads the statement by the RBZ.

NSSA has always been unwilling to inject capital into the bank, leaving it to suffer liquidity challenges. •

Capital Bank capitulates ahead of banks recapitalisation plans deadline

BH24

By Rumbidzai Zinyuke

Listed agricultural concern Ariston Hold-ings Limited recorded a reduced profit after tax for the half year ended March 31 2014 on the back of increased bor-rowings to finance plant rehabilitation programmes.

In a statement accompanying the group’s financial results, finance direc-tor Martin Dzviti said finance costs increased by 48 percent to $1 million as borrowings rose to $14,1 million as a result of the upgrades at the group’s factories. Profit for the year stood at $984 353 down from $2 million in March 2013. The group’s revenues were up 29 percent to $8,61 million

from $6,6 million in the prior period while profit before tax and interest was $2,34 million after a fair value adjust-ment of $5 million. Dzviti said Clare-mont estates’ turnover increased by 12 percent in the review period to $0,849 million contributing 10 percent to group turnover.

Kent estate recorded a turnover of $0,63 million which was an increase of 98 percent over the prior year con-tributing 7 percent of group turnover while Southdown reported a turnover of $4,1million. This represents 48 per-cent of the group’s turnover. Favco’s turnover was $3 million contributing 35 percent to group turnover. Dzviti said macadamia harvest had been

slightly delayed by the persistent rains although production was in line with last year. However, tea production was 40 percent up from the same period last year due to good weather condi-tions. “This trend is likely to continue into the second half of the year and we expect to exceed forecast production for the season,” he added.

He said investment in the tea factory upgrades last year had improved tea quality but global tea prices are sig-nificantly lower than last year mak-ing export tea prices marginal. In the period under review, tea sales were 14 percent lower than last year with sales are expected to increase in the second half of this year.

“With half the export teas still to sell, we expect a modest recovery in inter-national tea prices in the second half of the year. Traditionally, winter accounts for the bulk of blended tea sales,” Dzviti said. Stone fruits yields and prices were in line with forecast and potato produc-tion is four times last season. Going forward, Dzviti said the group would strive to maximize on the underuti-lized capacity in factories as well as the rehabilitated ones. •

4 NEWS

Borrowings weigh down Ariston Holdings

BH24 Reporter

Mthuli Ncube's hopes of landing the presidency of the African Development Bank (AfDB) have been dashed follow-ing an announcement by the South African government that it will not nominate anyone for the post.

Native Zimbabwean and current chief economist of the AfDB, Ncube was lobbying to head the regional financier in view of the impending departure of current president Donald Kabe-ruka next year. But the South African Finance Ministry yesterday said it had

taken a decision not to nominate a can-didate for the presidency of the AfDB, effectively ending Ncube's prospects.

"The process of selecting a candidate

within the Southern African Develop-ment Community (SADC) is currently under way and South Africa will act in accordance with the collective decision of the region," said the ministry in a statement..

The current president, Kaberuka, is currently serving his second five-year term. He was first elected in 2005, becoming the seventh president of the Bank Group since its establishment in 1963.

Members of the AfDB will elect a new president in May 2015. •

5 NEWS

South Africa ends Mthuli Ncube's AfDB hopes

Guzha gets regional Unilever postBy Rumbidzai Zinyuke

Unilever Zimbabwe managing director Nancy Guzha has been appointed vice president of Unilever Southern Africa.

The appointment is a huge feat for the first female MD Unilever Zimbabwe has ever had and makes her one of the few female executives at the helm of the household products manufacturing giant.

Guzha has been managing director of Unilever Zimbabwe for almost three

years and has pushed the company to regain its position as the most sought after brand.

She was recruited by Unilever straight after graduating from Reading Univer-sity in the United Kingdom in 1997 as management trainee in finance and eventually changed to marketing. She left to join Cairns Holdings Limited after three years but came back to Unilever in 2001.

She joined the Unilever office in Dur-ban as brand development manager

responsible for Lifebuoy and Vaseline in 2003.

In 2004 she came back to Zimbabwe as marketing director but left again to join Innscor Africa in distribution where she worked for 18 months. She finally came back as managing director in 2011, a position she has held to date.

Unilever has been in Zimbabwe since 1943 and manufactures products such as Geisha, Royco Usavi Mix, Sunlight washing powder and Key bar. •

Mr. Ncube

Global food prices fell in May for the second consecutive month as lower dairy, cereal and vegetable oil prices counteracted rising sugar and firm meat prices, the United Nations Food Agency said on Thursday.

The Food and Agriculture Organisa-tion's (FAO) price index, which meas-ures monthly price changes for a bas-ket of cereals, oilseeds, dairy, meat and sugar, averaged 207.9 points in May.

This was a fall of 2.5 points or 1.2 per-cent from April, when food prices fell led by a sharp drop in dairy prices due to reduced buying in China and Russia

and an extended season in New Zea-land that boosted stocks. Dairy prices continued to fall in May, by 12 points from the previous month.

FAO's cereal price index was lower at

204.4 points, a 2.4 point decrease from the previous month. The agency raised its world cereal production forecast for nearly 2.48 billion tonnes, almost 1 percent higher than it reported the month before.

This would be 1.4 percent lower than 2013's record world output but would still be the second largest production ever. FAO forecast world cereals stocks at the end of crop seasons in 2015 to be 576 million tonnes, an increase of almost 10 million tonnes from last month's forecast.

World wheat production was forecast at nearly 703 million tonnes in 2014, 12.6 million tonnes below 2013's record har-vest.

Wheat prices, which had contributed to price rises in recent months partly due to fears of disrupted trade flows from Ukraine, fell as shipping patterns from the country remained regular and weather conditions improved, FAO said. — Reuters •

AGRICULTURE6

World food prices drop in May for second consecutive month

BH24

By Rumbidzai Zinyuke

The recent hike in consultation fees for doctors by Government has put a dent on the pockets of consumers as it has increased their health bill and subse-quently the cost of living.

According to the Consumer Council of Zimbabwe, the cost of living went up

by 5,1 percent at the end of May from US$559,42 in April to US$587,97.

The $28,55 increase was attributed to the increase in medical consultation fees. Last month, consultation fees for general practitioners were increased from $20 to $35 while consultations at general practitioners’ rooms would now be charged at $30. Initial consultations

at physicians and or pediatricians are now pegged at $100 while subsequent visits were set at $70.

The consumer body said the health basket had gone up from $20 a month to $55 as a result. The food basket however decreased by $2,61 from US$151,35 in April to $148,74 by the end of May as a result of supermarket

promotions on most products and the ongoing OK Grand Challenge promo-tion. The price of detergents increased by 12,79 percent from $9,07 to $10,23 as the price of laundry bars went up.

Increases in prices were recorded in tomatoes which went up by 27c from $0,80 to $1,07. Sugar went up by 10c from $1,75 to $1,85 while cooking oil slightly increased from $1,65 to $1,67.

The prices of laundry bars increased by 23c from $0,96 to $1,19, washing powder by 8c from 81c to 89c and salt by 3c from 20c to 23c. Prices for beef and tea leaves declined from $4,40 to $4,10 per kilogramme and $1,87 to $1,85 respectively. Onions went down by 53c from $1,60 to $1,07 and flour by 2c from $1,89 to $1,87.

The prices of the other basic commod-ities which include fuel, margarine, mealie meal, fresh milk, bread, rice and bath soap remained unchanged from the April figures. The cost of water and electricity transport, rent, education and clothing also remained constant. •

8 NEWS

Medical fees hike pushes up cost of living

Selected heavyweights again drove the equities market forward as the Indus-trials Index gained 0.41 points (or 0.23 percent) to close at 177.04 points.

In industrials, counters that traded in the green outweighed those in the red 8 to 4. Giant telecoms Econet surged up 0.13 cents to close at 68.15 cents,

while Afdis was 0.10 cents firmer at 32.10 cents. Meikles rose 0.50 cents to settle at 18.50 cents, while conglom-erate Innscor advanced 0.36 cents to 73.06 cents Cement producer PPC inched up 0.20 cents to trade at 213.20 cents, with Padenga also trading pos-itively, adding 0.15 cents to close at 8.30 cents, Dawn Properties went up

5.56 percent to trade at 0.95 cents. On the downside, First Mutual slipped 0.50 cents to 6.50 cents. Turnall lost 0.25 cents to 1.75 cents and ART retreated 0.10 cents to trade at 0.30 cents.

Volumes remain subdued but were improved from yesterday, closing at a value of trades of $1.090 million. The increase in volumes was driven by trades in Delta, FBCH and TSL.

The Mining Index added to yesterday's gains, trading 4.07 points higher (or 12.07 percent) to close at 37.79 points following gains into counters. Riozim added 4 cents to close at 19 cents, while Bindura pushed up 0.28 cents to settle at 2.50 cents. Falgold and Hwange maintained previous trading levels. — BH24 Reporter •

9 ZSE REVIEW

Heavyweights drive bourse momentum

The failure of Capital Bank, which came full circle yesterday when the bank approached the Reserve Bank of Zimbabwe to voluntary relin-quish it licence, should serve as an important lesson to the National Social Security Authority.

NSSA has become renowned for making bad investment decisions, but acquiring a controlling stake in 2012 in the troubled bank probably tops them.

Indications from the market point to the fact that NSSA's new acqui-sition was always headed south-wards.

The bank - renamed Capital Bank from Renaissance Merchant Bank (RMB) after waywardness of previ-ous chairman Patterson Timba - is said to have inherited a bad loan book, with at least 95 percent of the loan book non-performing, it is believed.

NSSA also took a bank that inher-ited an overestimated asset on its balance sheet in the form of Afre shares (now First Mutual Holdings Ltd).

The question remains: why?

Does NSSA have the right internal capacities to carry out due diligence before investing pensioners' funds?

If no, why did they not engage external players who are better capacitated?

NSSA seems to be stuck on "buy", even when there may be nothing worth buying on the market.

And with NSSA having injected around $50 million in a now-de-funct financial entity, the ques-tion on many a depositor and the general public is: will the authority recover those monies, which - in all proper sense - belongs to other parties?

The money NSSA has "lost" so far amounts to a little more than just $10 million too. The whole story of NSSA in business has been one of "wrong choices made at the wrong time".

General estimations point in the direction of the authority having squandered over $100 million of pensioners' money in bad invest-ments after buying shares in strug-gling companies.

Additionally, NSSA has been mak-ing these "investments" at inflated prices.

Some of these "investments" to date include the $50 million injec-tion into troubled Capital Bank, $2,5 million invested in the now

defunct CFX Bank, $12 million splashed on overpriced Starafrica shares and $1,5 million into Afri-com Continental.

It is also estimated that $45 mil-lion, which was placed with Interfin, is locked in the financial institution which is under curatorship follow-ing an alleged abuse of depositors' funds and high levels of non-per-forming insider loans amounting to $60 million.

These are the well-publicised ones, but could just be the tip of the ice-berg.

NSSA needs to get its act together, because ultimately, it is the ordi-nary pensioner who suffers. •

10 BH24 COMMENT

Capital Bank should be a lesson learnt...for NSSA

After 17 years, the timing is finally on Kenya’s side as the government read-ies its first Eurobond sale, betting the nation’s growth prospects and resurgent demand for emerging-market debt will keep borrowing costs contained.

Investors may demand a yield of about 7 percent to buy the securities, less than the 7.48 percent yield on similarly rated Zambian bonds, according to Raza Agha at VTB Capital Plc in London. Aly-Khan Satchu at Rich Management Ltd. in Nai-robi sees a range between 7.5 percent and 8 percent, depending on whether Kenya sells $2 billion or $1.5 billion.

“We are still living through another six to nine months of an environment which is very, very beneficial for issuers given the high demand for emerging mar-kets,” Yerlan Syzdykov, who helps over-see the equivalent of about $5.4 billion as head of emerging markets bond and high yield at Pioneer Investments, said in an interview in London yesterday. “A lot of countries, especially in sub-Saha-ran Africa, will use this as an opportunity to tap the market.” East Africa’s largest economic growth will probably acceler-ate to 6.3 percent this year, from 5.6 percent in 2013, driven partly by tea and cut flower exports, according to

International Monetary Fund estimates. African dollar debt returned 8.3 percent this year, with the average yield drop-ping to a one-year low of 5.06 percent last week, JPMorgan (JPM) Chase & Co. indexes show. Gains have been fueled by speculation central banks in Europe and the U.S. will keep monetary policy accommodative.

Record Sales Kenya first considered selling Eurobonds in 1997, and would be following a record year for Africa in 2013. That included a first-time offering by Rwanda, and sales by Nigeria and Ghana. Zambia, which shares Kenya’s B1 rating at Moody’s Investors Ser-vice, sold $1 billion of Eurobonds priced to yield 8.6 percent in April. The rate

was 7.51 percent yesterday, up from a record low of 7.35 percent two days earlier. “Kenya is a stronger credit, so it should price inside Zambia,” Agha, VTB Capital’s chief economist for the Middle East and Africa, said yesterday. “I expect there to be good demand for the issue.”

Barclays Plc, JPMorgan, Standard Bank Group Ltd and QNB Capital were picked to organize investor meetings in the U.S. and Europe from today until June 15, a person familiar with the deal said yesterday. A benchmark dollar bond may follow, according to the person, who asked not to be identified because they’re not authorized to comment. —Bloomberg •

11 REGIONAL NEWS

Kenya Readies Debut Eurobond after 17-Year Wait: Africa Credit

12 DIARY OF EVENTS

The black arrow indicate level of load shedding across the country.

POWER GENERATION STATSGen Station

5 June 2014

Energy

(Megawatts)

Hwange 699 MW

Kariba 750 MW

Harare 46 MW

Munyati 18 MW

Bulawayo -- MW

Imports 105 MW

Total 1615 MW

5 June 2014 – Indigenisation Policy Dialogue Place: SAPES Seminar Room, 4 Deary Ave-nue Belgravia, Harare, Time : 5pm-7pm

11 June - Rainbow Tourism Group 15th Annual General Meeting of the Shareholders, Place: Jacaranda Rooms 2 and 3 at the Rainbow Towers Hotel and

Conference Centre, 1 Pennefather Avenue, Harare, Time: 12:00

13 June 2014 - Securities and Exchange Commission of Zimbabwe 2nd Shareholders Forum & Responsible Invest-ing in Zimbabwe Conference 2014 Place : Cresta Lodge, Harare, Time : 8am -2pm

26 June - Masimba Holdings Limited Thirty-Ninth Annual General Meeting of Mem-bers for the period ended 31 December 2013, Place: 44 Til-bury Road, Willowvale, Harare, Zimbabwe, Time: 12:00

THE BH24 DIARY

BH24

14 ZSE

ZSEMOvERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

RIOZIM 26.67% 19.00 ART -25.00% 0.30

BNC 12.61% 2.50 TURNALL -12.50% 1.75

DAWN PROPERTIES 5.56% 0.95 FIRST MUTUAL -7.14% 6.50

MEIKLES 2.78% 18.50 ZPI -2.44% 0.80

PADENGA 1.84% 8.30

INNSCOR 0.50% 73.06

AFDIS 0.31% 32.10

ECONET 0.19% 68.15

PPC 0.09% 213.20

Indices

INDEX PREvIOUS TODAY MOvE CHANGE

INDUSTRIAL 173.46 174.06 +0.60 POINTS +0.35%

MINING 29.39 33.89 +4.50 POINTS +15.31%

Stocks Exchange

15 AFRICA STOCkS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire 246.37 +2.18 +0.89% 07Mar

Egypt 7,949.60 -75.68 -0.94% 06Mar

Ghana 2,324.35 +5.23 +0.23% 02June

Kenya 4,881.56 -13.57 -0.28% 30May

Malawi 12,662.47 +0.00 +0.00% 07Mar

Mauritius 2,074.51 -3.51 -0.17% 07Mar

Morocco 9,544.10 +21.01 +0.22% 07Mar

Nigeria 41,502.00 +27.60 +0.07% 02June

Rwanda 131.27 +0.00 +0.00% 24Oct

Tanzania 2,018.97 +25.40 +1.27% 07Mar

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,503.90 +0.81 +0.05% 10Sep

Zambia 4,242.74 +14.95 +0.35% 10April

Zimbabwe 174.91 +0.02 +0.01% 02June

African stock round up Commodity Prices

Name Price

Crude Oil 1,300.91 -0.21%

Spot Gold USD/oz 1,292.63 -0.26%

Spot Silver USD/oz 19.38 -0.46%

Spot Platinum USD/oz 1,421.25 -0.33%

Spot Palladium USD/oz 798.50 -0.64%

LME Copper USD/t 6,770 -0.18%

LME Aluminium USD/t 1,780 -1.17%

LME Nickel USD/t 18,230 -1.73%

LME Lead USD/t 2,095 -1.41%

Quote of the day —"The meriT in acTion lies in finishing iT To The end." - genghis Khan

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16 INTERNATIONAL NEWS

Gold holds near 4-month low as ECB move on rates awaited

Gold was little changed near a four-month low on Thursday but faced a risk of more losses if the European Central Bank (ECB) meets expecta-tions to cut rates, a move that could strengthen the dollar and hurt bullion.

The ECB is poised to impose negative interest rates on its overnight deposi-tors at its Thursday meeting, seeking to cajole banks into lending instead and to prevent the euro zone falling into Japan-like deflation.

A weaker euro and a stronger dollar would make the dollar-denominated gold more expensive for holders of other currencies. Spot gold was flat at $1,243.51 an ounce at 0642 GMT.

The metal is close to its four-month low of $1,240.61 hit earlier in the week. "Technically, the trend for gold is very clear. It is heading downwards and is likely to test support level at $1,200," said Mark To, head of research at Hong Kong's Wing Fung

Financial Group. "Financial markets are quite bullish and investors are not risk averse as they expect U.S. economic data to be strong."

To noted that while an ECB move to cut rates could theoretically support gold as a monetary easing measure, tech-nical momentum and a stronger dollar could have a much bigger impact on prices. The euro languished at four-month lows early on Thursday, while

the dollar index held near a four-month peak hit earlier in the week.

Markets were also eyeing Friday's U.S. nonfarm payrolls to gauge the strength of the economy. A weak report could burnish gold's safe-haven appeal.

In news on other precious met-als, South Africa's AMCU union has rejected a government wage increase proposal aimed at ending a crippling five-month strike by platinum miners, the Business Day newspaper reported on Thursday.

South Africa's new mining minis-ter Ngoako Ramatlhodi had said on Wednesday that he hoped to resolve the strike this week. — Reuters •

By Frik Els

Labour negotiations at South Africa's PGM mines are edging closer to a reso-lution as talks mediated by a ministerial task team continue.

July platinum softened for a fifth ses-sion in a row on Wednesday to $1,433 an ounce and is down sharply from the $1,493 level less than two weeks ago over renewed hopes for an end to the strike and tensions between Russia and the Ukraine fading into the back-ground.

South Africa and Russia combined account for close to 80% of global sup-ply of palladium and 70% of platinum output which are mainly used to clean emissions in automobiles.

Palladium has outperformed its sister metal, with the price of June palladium trading flat on Wednesday at $837 an ounce, but not far off a three-year high. Palladium hit a record price of $865 in February 2011. More than 70,000 workers at the world's three largest platinum and palladium producers, Anglo American Platinum (LON:AAL),

Impala Platinumm (OTCMKTS:IMPUY) and Lonmin (LON:LMI), have been on strike since January 23. Newly-installed Minister of Mineral Resources Ngoako Ramatlhodi said the team hoped to have a resolution by the end of the week while leader of the militant Amcu union Joseph Mathunjwa said the talks "went well".

More meetings with both sides are scheduled for Thursday. The latest offer from mine management calls for a monthly increase of R800 ($75) a month every year for five years for those at the bottom of the pay scale and smaller hikes for those that earn more. The R800 equates to 16% pay

increase for the first year for those earning the minimum of some R4,500 ($420) a month currently. Mathunjwa described a previous similar offer as simply a "repackaging".

The companies' have lost combined revenue of R20.9 billion (some $1.9 billion) while striking workers have lost almost $900 million in forfeited wages.

Roughly 10,000 ounces of platinum production and 5,000 ounces of pal-ladium are lost each day the strike drags on. Even when strikers do return to work it would take up to three months to restart production. Despite the recent softening, the strike and a

stand-off between the West and Russia over Ukraine have pushed the plati-num price up 4% this year, while the palladium price has surged 16% this year to three-year highs. A huge factor boosting the palladium price has been the launch of two new physical palla-dium-backed exchange traded funds in Johannesburg in late March.

Holdings in palladium-backed ETFs rose to fresh record highs of more than 85 tonnes or over 3 million ounces as at 30 May following the launch of two physical palladium funds listed in Johannesburg a few weeks after the strike kicked off. Holdings in a platinum ETFs are also at an all-time high.

Industry consultants Johnson Matthey Plc said in recent report platinum con-sumption will beat supply by 1.22 mil-lion ounces while the palladium short-fall will widen to 1.61 million ounces, from 371,000 ounces last year and the eighth year in a row of deficits. That would constitute the largest market deficits ever, based on Johnson Mat-they data going back to 1975 for plati-num and 1980 for palladium. - Mining.com •

17 ANALYSIS

Platinum price correction underway as strike deal edges closer