Stillwater Mine Back with General Motors
New Palladium Coin Should Also Help Business
Southwest Montana took an economic hit two years ago, and hundreds lost their jobs, when automotive giant General Motors filed for bankruptcy and, while under government control, ditched its contractual relationship with Stillwater Mining and began buying precious metals, used in the manufacture of catalytic converters, from overseas suppliers.
In December 2010, though, Stillwater announced a new agreement to sell palladium to GM beginning January 1, 2011 and through 2013.
Stillwater is the only US producer of palladium and platinum and is the largest primary producer of platinum group metals outside of South Africa and the Russian Federation.
Stillwater previously had a palladium and rhodium supply agreement with GM, but following GM's filing for Chapter 11 bankruptcy protection in 2009, the US auto maker also filed a petition with the bankruptcy court seeking approval to reject Stillwater's supply agreement. Following a hearing in July 2009, the judge approved the GM request, effectively voiding Stillwater's supply contract with GM.
A platinum group metals supply agreement between Stillwater and the Ford Motor Co was due to expire at the end of 2010.
Passage of a law in November of last year mandating that the US Mint produce palladium coins could also benefit Stillwater, and the local economy, by driving up investment demand when the coins hit the market. The American Eagle Palladium Bullion Coin Act of 2010 was pushed through Congress by Montana’s bipartisan congressional delegation.
“The passing of any coin legislation would naturally infer that there is demand for palladium coins as a form of investment–and we have seen that in gold, silver and platinum, where the coin market is an important part of the overall demand picture for those particular metals,” Will Rhind recently told Kitco News, a prominent precious metals publication. Rhind is head of U.S. operations for ETF Securities, which in 2010 launched the first U.S.-traded physically backed platinum and palladium exchange-traded fund (ETF), through which investors can own shares backed by physical stores of precious metals.
In 2010, ETF holdings, which resemble mutual funds but trade like stocks, have grown 75 percent and investor buying has fuelled palladium prices to near a 10-year high of $772 an ounce.
“Now that the public or investor base in the U.S. can actually buy palladium coins, obviously that will add to the demand picture for palladium,” Rhind said.
The US Mint though is unable to say exactly when the new coins will be made available to investors.
After GM opted not to buy U.S. palladium, a severe blow to Stillwater Mining that resulted in the loss of hundreds of local jobs, U.S. Rep. Rehberg (R-MT) pushed the palladium coin bill hoping to in some measure increase demand for the Montana-mined metal.
Recently, with demand for precious metals increasing, Stillwater announced it will hire 200 new workers in 2011.