JOHANNESBURG: Platinum markets have avoided an eruption that would have shaken them to the core with mine nationalisation effectively killed as policy in South Africa, which sits on about 80 per cent of the global supply of the precious metal. But they should brace for aftershocks.

The world’s richest platinum veins lie along the political faultlines of South Africa and Zimbabwe, where income disparities, labour strife and political populism are fueling intense brands of resource nationalism.

“All platinum supply, bar bits and pieces, come from southern Africa. In almost any other mining sector you would be able to do cross-geography comparisons about political risks, security of tenure and labour relations,” said Nic Borain, an independent political analyst based in Cape Town ahead of the London Platinum Week gathering.

“But on platinum you are stuck in the area of the world where resource nationalism or the social demands on those mining companies are most intense,” he said.

Start with South Africa, where the mother of all risks - nationalisation — has been dodged for now.

A mining study submitted to the ruling ANC rejected nationalisation as an “unmitigated disaster” for Africa’s largest economy but proposed a 50 per cent tax on profits.

Such a tax could prove hard on smaller producers in an industry where the two biggest, Anglo American Platinum and Impala Platinum between them account for around 65 per cent of global production.

Even bigger producers may find it squeezes margins as they grapple with cost pressures on a range of fronts: sharply higher power costs, deeper shafts and annual wage increases that have typically reached double digits and exceeded inflation.

Into this mix just throw in labour militancy and stir.