NEW YORK (Commodity Online): Will Stillwater Mining get back the general Motors contract to supply platinum and palladium to the auto major? That is the question haunting millions of investors and the platinum market across the globe.

After the GM file for bankruptcy, the car maker had cancelled the contract with Stillwater Mining for platinum and palladium, which were used in making the exhausts of the vehicles

However, after a lot of political pressure and cries over the job losses in Stillwater, GM has invited Stillwater executives to meet with them next week to discuss the auto company’s decision to drop its metals contracts with the only US PGM miner in favour of foreign PGM miners in Russia and South Africa.

GM’s decision will cost Stillwater an estimated $5 million to $10 million annually.  The decision to drop the US PGM contract to use US taxpayer dollars to buy PGMs from foreign miners ignited a political firestorm in Montana that has made it ways to the US Congress.

However, the biggest implication will not be the effect on revenue in the short term, but the increased exposure to any sharp drops in PGM prices, as the automotive contract included floor prices, which provide a cushion of pricing certainty, that helps ensure the company’s ability to weather down cycles in metals prices.

The company’s floor price agreements with Ford are also scheduled to come to an end when the Ford agreement expires at the end of 2010.

Stillwater produces palladium and platinum from two mines in the Beartooth Mountains of south central Montana, in the US.

In November last year, the firm announced that it would scale down operations at its East Boulder mine, reduce capital expenditure and cut jobs across the group, in an attempt to stay profitable amid falling PGMs prices.

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