Former United Steelworkers liaison in top “auto czar” spot as Rattner “quits”

Larry, I’m not making a comment on Rattner – bolting the starting gate when the race horse gates catch fire – as the prime subject. Actually he’s more an easy target of inside corruption since he knows he’s leaving a quagmire and heading home in supposed accolades – dodging the repercussions.

But my comment is in response to your “replacing an a’apolitical appoinment with a political appointment” comment. And BTW, Obama’s czars are anything *but* a’political.

Like Rattner, Bloom is also an “expert in financial restructuring”. Bloom’s expertise happens to fall on the union side of the equation – and specifically the metals/mining unions. Good thing for the Montana minders and USW. Piss poor option for the US taxpayer, on the hook for government motors majority ownership. Would you, as a majority share owner, vote to spend more for necessary inventory to subsidize?

But you obviously did not read only my previous post for the uses for the PGM metals… which also feed the electronics/computer industry, hydrogen cells etal. Their ability to survive to serve that secondary market, in addition to catalytic converters… plus the jobs mining and refining… may well depend on the new czar undoing the old czar’s work… which was undoing the legislative damage making subsidies necessary for the American PGM industry to survive.

Delicious in it’s insanity. Sad in it’s repercussions on ordinary Americans that Obama professes to revere.

Why am I explaining this to someone who should be intelligent enough to figure this out on his own???

Thank you for your contribution, Daniel. I do agree that the demand for platinum and palladium has been down globally for all aspects of it’s useage – i.e. dental alloys, jewelry, and catalytic converters just to name some – due to the declining demand and the world’s economic status. All this was in the Platinum 2009 Market Review.

Global platinum demand fell by 5.0 per cent to 6.35 million ounces in 2008, according to Johnson Matthey in “PLATINUM 2009″, released today. Autocatalyst demand suffered due to a slowdown in North American and European vehicle production. Industrial demand was also affected by the growing weakness in the world economy and declined slightly. However, a fall in the price of platinum revived demand from the jewellery and physical investment sectors in the second half of the year. Supplies of platinum fell by 9.5 per cent to 5.97 million ounces last year mainly due to a difficult operating environment in South Africa. Overall, the platinum market was in deficit by 375,000 oz.

It was noted that it was the first time that the auto industry demand declined since 1999.

Also in that same review, they noted that the supply in the South African mines were declining simultaneously due to interruptions to electricity supply, bad weather, safety closures, smelter shutdowns and shortages of skilled staff. Due to base supply/demand economics, less supply will affect pricing…. and the demand for PGMs for various uses has not dried up.

They also noted that palladium demand was on the increase, but the supply declining… despite economic problems…. still drove the price up.

And you will note in my first post on Stillwater and the GM contract, I addressed facts that Stillwater was owned by Russia’s Norilsk.

None of this changes the reality that, in a declining demand, the GM contract becomes even more important for the American PGM industry. Nor does Norilsk’s majority ownership… which they’ve been trying to sell since last October (in the first linked post)… negate the reality that the miners and refining facilities all employ US workers.

INRE the demand for platimum/palladium, the palladium demand is projected to rise in China, Europe and America for jewelry.

According to a report by Platinum 2008 Interim Review written by David Jollie and published by Johnson Matthey, palladium demand is expected to rise to 780000 oz in 2008, reversing two years of decline.

Global demand for palladium from the jewellery sector is expected to reflect an increase of 55000 oz to 780000 oz. Demand in China is set to rise to 550000 oz.

Most of the unsold original stock of 95% purity has now been reprocessed and recycling rates are declining. While the first half of the year saw weak purchasing of palladium by jewellery manufacturers, the fall in the metal price in the third quarter of 2008 rekindled this market.

Interest in palladium jewellery has continued to grow in Europe and North America where pro-duct availability has improved, driving combined demand to 125 000 oz.

Yearly Chinese jewellery demand is expected to reflect an increase of 10%, to a total of 550 000 oz, in 2008.

Palladium demand from jewellery manufacturers was relatively weak in the first half of 2008. The palladium price reached a six-year high and encouraged the industry to reduce working stocks of metal.

Additionally, MarketWatch wrote that platinum has gained 60% from it’s lows last October, coincidently about the same time Norilsk announced it’s desire to sell. And both platinum and palladium prices are on the rise.

Finally, the North American Palladium group believes that the increased fuel regulations play a significant role in the future demand of palladium. I can’t argue this one.

All this still translates to the reality that the US mines need workers to harvest the rare resource (since it’s only one of three nations that produce the PGMs). And the GM contract – with a private party agreement for subsidizing – being cancelled affects the stability of that operation.

So I have to wonder, are you suggesting that the J-R Reef resources are expendable as a world market?

I forgot to add, Daniel… I know the main thrust of your interest in the PGMs is jewelry, via your blog. But unless there is an alternative to use of either platinum or palladium in hydrogen cells, increased development of this technology also lends to increasing demand.

Catherine, I did have some side bar info INRE the incestuous relationship between Rattner, Chrysler’s Cerebius and Quadrangle back in my Mar 31st post on the fate of the auto manufacturers. This added stuff was courtesy of a comment originally by Missy.

I did not, and will not pursue Rattner’s investigative status for a single, and very prime reason… consistency. I do not sanction those spreading rumours and speculation about Palin and fantasy/manufactured FBI investigations, and I will hold that consistency for Rattner as well. If he comes under investigation, I will wade into those waters (and latest reports from Mayor Bloomberg say it’s not likely he’ll be investigated, but doesn’t eliminate possible civil suits).

So Rattner has not been named as as subject yet, and apparently is not returning to Quadrangle post O’admin duties. Apparently, Stillwater’s status is not the only fallout he is avoiding.

His official reasons are what they are. But if I were to bank on a more sure bet as to the reason for his beating feet, and leaving it in the hands of a former USW employee, I’d say GM-Stillwater and the stink this can and will raise (once the media learns to multitask…) is sufficient enough. He doesn’t have to publicly undo what he wrought in the restructuring back rooms, and the pressure of dealing with the mining job loss falls on his successor.

One more for jeweler Daniel INRE the PGMs. And this is from the transcript of Stillwater Mining Company’s 4th quarter earnings for 2008, by Frank McAllister, Chairman and CEO of Stillwater Mining.

Now the company’s most important end market of course is sales for catalytic converters used primarily in new cars and trucks. Ford and General Motors are our two largest customers and between them they take 100% of our mined production of Palladium and 70% of our mined platinum. Despite the industry downturn, we have continued to deliver to both companies according to the terms of the respective contracts. While lower prices in these contracts have guaranteed us a minimum selling price for our mined Palladium, that in 2009 will average $364 per ounce, an important benefit to us when palladium’s price is hovering around $200 per ounce today.

~~~

Of course, these automotive contracts with their favorable pricing provisions will not last forever. The larger of the two contracts is slated to expire at the end of 2010 and the other runs out at the end of 2012, [Mata Musing: that's the GM contract we are discussing here...] and absent their renewal we still should have markets for production as platinum and palladium are traded – they are traded freely on the terminal markets, but in the present pricing environment, the likelihood of obtaining comparable floor prices in any new PGM supply contract is probably low.

Moreover, in view of the current financial conditions of the automotive companies, we have faced the continuum of this, but one or both of these critical customers could file for bankruptcy and along with that walk away from our existing agreements prior to their expiration. Having essentially stabilized our cash position in the current environment, we are now acutely focused on the steps we will need to take to remain competitive and viable once the floor prices in the automotive contracts are gone.

It is obvious that a great portion of Stillwater’s business is bolstered by the GM contracts.