Last year will go down in precious-metal history for one of the most drawn-out - and ultimately costly - industrial actions in living memory. The strike that effectively paralysed South Africa's platinum industry dragged on for five months from the end of January, costing the three principal players - Amplats, Implats and Lonmin (LMI) - an estimated 24bn rand (£1.37bn) in lost production receipts. Those anticipating a resultant surge in platinum prices were left disappointed, as industrial end-users had reportedly reinforced their inventories in anticipation of the labour dispute. The platinum price remains in the doldrums.
That looks unlikely to change in the short term. Above-ground stocks are still plentiful, according to the World Platinum Investment Council. Much will depend on the level of inventories within the European automotive industry - a key market for platinum. Looking further ahead, supply could be affected by the next chapter in the strike story, which has accelerated moves towards mechanisation within the industry.
The FTSE 350 gold miners fared better than expected in 2014, particularly given the appreciation of the US dollar: gold tends to be out of fashion when the greenback is on the rise. Shares in both Centamin (CEY) and Acacia Mining (ACA) - formerly African Barrick Gold - were up by a third over the year. Randgold Resources (RRS) also recorded a double-digit return, with production buoyed by the launch of the Kibali mine in the Democratic Republic of Congo.
The gold price is more or less where it was a year ago - which is far lower than it was at the start of 2013. But with restrictions on gold purchases in India easing and the loosening of eurozone monetary policy, the flight into physical assets may well resume, albeit on a smaller scale. The miners will almost certainly be feeling more optimistic than they were a year ago.
| Company name | Share price (p) | Market value (£m) | PE ratio | Dividend yield (%) | 1-year performance (%) | Last IC view: |
| Acacia Mining | 314 | 1,286 | 3.2 | 0.6 | 51.8 | Hold, 252p, 28 July 2014 |
| Centamin | 70 | 811 | 9.1 | 0.7 | 50.4 | Hold, 64.65p, 15 Aug 2014 |
| Fresnillo | 925 | 6,813 | 77.9 | 0.7 | 19.7 | Buy, 934p, 7 Aug 2014 |
| Lonmin | 180 | 1,053 | 52.9 | nil | -43.0 | Buy, 193p, 11 Nov 2014 |
| Petra Diamonds | 176 | 907 | 19.4 | nil | 40.8 | Hold, 196p, 19 Sept 2014 |
| Polymetal International | 607 | 2,554 | 1,905.1 | 1.6 | 6.6 | Hold, 533p, 28 Aug 2014 |
| Randgold Resources | 5,525 | 5,120 | 29.9 | 0.5 | 34.4 | Hold, 5040p, 11 Aug 2014 |
Favourites:
London-listed diamond miners have performed admirably even as the wider mining industry has struggled. The diamond businesses of big integrated miners such as Rio Tinto (RIO) and Anglo American (AAL) helped prop up their earnings through 2014, while independent pure-plays like Petra Diamonds (PDL) continue to benefit from record demand levels. Not so long ago, Rio Tinto was actively looking to hive off its diamond assets, but only this month the group announced plans to invest $500m (£329m) in a new mine located in the Indian state of Madhya Pradesh.
Outsiders:
Russia-focused precious metals miner Polymetal (POLY) swung back into profit at the half-year mark, aided by a significant fall in all-in cash costs. Unfortunately, the crisis in Ukraine has hit sentiment towards Russian-related stocks. It seems any operational progress will be largely overlooked by investors this side of a political settlement.
