Platinum futures gain in Tokyo

Platinum futures gained in Tokyo amid expectations wage negotiations at South Africa's biggest mines would disrupt metal production.

The National Union of Mineworkers yesterday declared a dispute with Impala Platinum Holdings, the world's second biggest producer, paving the way for a work stoppage.

"The market will become progressively more influenced by chatter pertaining to the talks, particularly if these appear to be making little headway," James Steel, an analyst at HSBC Securities in New York, said in a note to clients dated yesterday.

He said there is "evidence of a relatively tense climate in South Africa regarding pay disputes".

Platinum for delivery in April 2008 gained 4 yen, or 0.1 per cent, to close at 5,089 yen a gram ($1,280 an ounce) on the Tokyo Commodity Exchange. The most-traded contract on June 19 climbed to as much as 5,099 yen a gram, a record high.

Platinum for immediate delivery advanced $3.00, or 0.2 per cent, to $1,292 an ounce as of 5:10 p.m. Tokyo time. Palladium for immediate delivery gained 50 cents to $375.00 an ounce. Platinum and palladium are used in jewelry and to make catalysts that help reduce emissions in cars and other vehicles.

Miners in South Africa, which accounts for more than 80 per cent of global platinum output, are demanding higher wages as metals prices climb to records and living costs inflate.

Gains in platinum may be limited on signs production of the metal will increase, widening an expected surplus this year. Impala yesterday said it would almost double its five-year spending plan to boost output.

The company will spend 25 billion rand ($3.5 billion) over five years to raise production by 35 per cent to 2.5 million ounces in 2012, climbing to 2.8 million ounces "later in the decade", Impala spokesman Bob Gilmour said yesterday.

Global platinum supplies exceeded demand last year, the first surplus since 1998, London-based metals trader and manufacturer Johnson Matthey Plc said last month.

South Africa accounted for 5.29 million of the 6.79 million ounces produced by mines worldwide, according to Johnson Matthey. The amount of extra platinum will probably increase this year, the trader and maker of pollution control devices said on May 14.