is expected to decrease its palladium stockpiles sales as stockpiles are almost depleted, according to reliable sources that included Bloomberg. Barclays estimates that sales from Russian palladium stockpiles will drop by as much as 60 percent (to 300,000 ounces) this year. Interfax Report expected that supply from those stockpiles, a state secret, won't exceed 144,678 ounces this year or next and may cease as early as 2014. South Africa With the largest deposits, South Africa theoretically has the potential to meet the higher demand. However, South African palladium production is constrained by multiple operational and regulatory issues, such as rising electricity costs, shortfall of skilled labour and water, mine safety issues, and the strengthening South African Rand relative to the U.S. dollar (or dollar weakness relative to the Rand). An examination of the South African palladium industry may give hints as to the future course of palladium prices. At least three problems are expected to continue to affect miners and, coupled with the rising overhead cost of mining, will likely limit palladium supply from South Africa Low production: Output in South Africa suffered from poor productivity in the first half of 2011 due to a series of government-mandated safety work stoppages and costly illegal strikes, according to the Johnson Matthey Platinum 2011 interim review. Rising cost of production: Mining companies are paying more for wages and energy at a time when they are digging ever deeper to maintain production. Mining expense rose 30 percent in 2010 in South Africa according