Article source: miningreview | translation: the world association of platinum investment
Platinum group metals are highly valued for their wide range of industrial, medical and electronic applications. Dr Davis, precious metals consultant, explains the impact of a long and sustained decline in the supply of platinum group metals from mines in South Africa. In this environment, platinum and platinum-group metals are increasingly in demand due to increasing pressures from climate change.With more than 80 percent of the world's platinum reserves, South Africa is one of the world's largest producers of the platinum group metal. These metals are used in a wide variety of different applications and industries, including existing and undeveloped projects, covering the automotive, electric fuel cell technology and luxury goods industries.Platinum is one of the rarest metals in the world and has unique qualities that make it highly valuable in several different areas of demand. Its unique physical and catalytic properties have established its role in industrial applications. At the same time, its unique precious metal properties also make it the first choice of jewelry metal.The global platinum market was valued at $7.3 billion in 2021 and is expected to reach $11.45 billion by 2030, representing a compound annual growth rate of 5.13% from 2022 to 2030. However, in Davis's view, South Africa is likely to miss an opportunity to capitalise on its needs.Over the past two years, the supply, demand and prices of platinum group metals have fluctuated. Supplies have been disrupted to varying degrees due to the COVID-19 pandemic and the breakdown of the Anglo American Platinum converter plant, resulting in a massive inventory backlog of more than 1 million ounces."I think the decline in platinum mine supply is due to a combination of factors. These include the decline in grade of the three deposits over time, unequal depletion of reserves, and the historical evolution of the mining mix ratio of the platinum group metal lode to the higher mining ratio of the UG2 lode (which has a lower platinum grade compared to the Merensky mine)."It is important to note that there are other factors that could accelerate the decline in platinum supply, in particular the decline in platinum group metals supply as a result of the energy crisis at South Africa's national power company Eskom.In such a scenario, there would be a persistent shortage of platinum, which would put upward pressure on prices, he said. In addition, reduced supply from mines will accelerate platinum into a general market shortage. Davis added that the drop in supply and overwhelming demand are the formula for a "perfect storm.""We can expect platinum to continue to trade well above its all-time high of $2,253 / oz as the platinum market enters a state of shortage and thus drives platinum group metal prices higher," Davis said.Green energy
Platinum is used in the production of hydrogen electrolytic cells through the use of the proton exchange membrane (PEM) process, which is key to obtaining hydrogen for zero-emission applications. The World Platinum Investment Association estimates that demand for platinum from proton exchange membrane electrolytes could reach 400,000 to 1.3m ounces by 2030.
"This is a huge leap forward that could propel platinum to become one of the most critical metals in the green transition, alongside copper and silver," reported Indrabati Lahiri, equity market analyst at investment firm Capital.com.
Platinum supply, on the other hand, remains a key issue. While mine supply has grown at a compound annual growth rate of about 1.7 percent over the past 30 years or so, with mine supply in 2019 at about 6.9 million ounces, investors fear that may not be enough.
"This is because the demand for green hydrogen may require an additional supply of platinum of about 1 million ounces per year, which is a tall order by any measure. To add insult to injury, platinum has historically had very low ore reserve replacement capital, which makes the situation even more complicated."
Health care necessities
Platinum is a precious metal that has been used in a variety of medicines and medical devices since the early 1970s. Because of its non-toxicity, the metal has also been useful in the production of pacemakers, medical catheters, stents and even cancer therapies. Platinum-based compounds are used in more than 50 percent of the world's cancer drugs, according to the International Journal of Research and Treatment of Cancer. With an estimated 700,000 pacemakers installed worldwide each year, platinum application and demand in this market is likely to increase due to these socioeconomic factors.
Demand for cochlear implants, which reached 75,000 a year in 2016, is also expected to rise. Johnson Matthey, a global supplier of high-grade platinum filaments and platinum sheets used in cochlear implant components, predicts that the demand figure for cochlear implants could grow to more than 175,000 a year by 2023.
Comparison of palladium supply
The compound annual growth rate (CAGR) of global palladium ore supply declined by 1.8 per cent between 2006 and 2019. The compound annual growth rate of palladium supply from South Africa fell 2.4%, while supply from Russian mines fell 2.8% over the same period. The price mismatch between palladium and platinum has prompted automakers to substitute palladium for platinum in gasoline cars.
According to Coin Price's latest long-term forecast, palladium will reach $2,000 by mid-2023 and then $2,500 by mid-2024. Palladium will rise to $3,000 in 2025, $4,000 in 2026 and $5,000 in 2028.
iridium
Despite its wide range of uses, mainly in high-performance alloys, only about seven tonnes of iridium are produced globally each year. The potential problem, therefore, is that iridium is an important feedstock for the production of green hydrogen (produced by electrolysis of water) in low-carbon energy systems. Catalysts made of iridium and platinum (currently typically 65% iridium and 35% platinum) are essential for the most popular current cell technology (proton exchange membrane systems).更"Potential growth in platinum demand looks manageable, but iridium may be more of a challenge," said a metals and mining report from Wood Mackenzie. By 2023, the total global iridium production will be around 255,000 ounces."An ounce of iridium is expected to reach a low of US $0.19 and a high of US $0.23 by 2030, with an average price of US $0.20 for the whole of 2030. Platinum group metals mining in South Africa is not safe; The industry has faced numerous challenges in the past and has been starved of funds for expansion and replacement of ore reserves for years. (Iridium is currently $4600 an ounce)Davis concluded: "The investment and political environment is not conducive to committing large amounts of capital and there is a clear lack of investor appetite. Given the availability of capital, it will take at least five to 10 years to ramp up new platinum group metal capacity." (Credit: miningreview)
World Platinum Investment Association
Note: The information provided here is for informational purposes only and does not represent the views of the World Platinum Investment Council and does not constitute or should be construed as the investment advice of the World Platinum Investment Council.
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