Commodity Online
TORONTO: Automaker General Motors’ decision to end the palladium and rhodium supply agreement with US platinum-group metals (PGMs) producer Stillwater Mining is set to hit PGMs prices in the global market.

After moving the bankruptcy plea before the US government, GM has stated that it itends to close the supply agreement with Stillwater Mining. This will definitely impact the company’s future plans and its production.

However, Stillwater plans to file an objection to this move. Stillwater said it has received notice advising that GM has petitioned the bankruptcy court to reject the existing palladium & rhodium supply agreement between GM and Stillwater Mining Company. In response, the Stillwater will file an objection with the bankruptcy court and has been in contact with its elected representatives.

Commenting on this announcement, Stillwater chairman and CEO Francis R McAllister said: “Obviously, we are extremely disappointed that GM has chosen to reject our supply agreement outright in bankruptcy. The company has been negotiating in good faith with GM for nearly nine months regarding the terms of this agreement and had already implemented two interim contract modifications at GM’s request. “The company’s PGM supply agreements with GM and Ford include provisions that guarantee a minimum purchase price for palladium and platinum when prices fall below stipulated levels. These provisions are currently very beneficial to us in view of today’s relatively low PGM prices. In the absence of these agreements, the company will still be able to sell its production into the market, but would lose the benefit of these pricing floors.

He added: “We certainly recognize that the current economic downturn has decimated the automotive industry, forcing GM and others to make some difficult choices. At the same time it seems disingenuous to me, during a period when preserving American jobs is such a high domestic priority, that GM, while receiving immense financial support from the US government, would elect, as I understand it, to continue its supply agreements with foreign palladium suppliers while seeking to terminate an agreement with the sole US miner of palladium.”

Stillwater Mining company is the only US producer of palladium and platinum and is the largest primary producer of platinum group metals outside of South Africa and Russia. The company's shares are traded on the New York Stock Exchange under the symbol SWC.

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