Industry news | investors focus on platinum palladium again

Issuing time:2023-04-07 09:12

Article source: smallcaps | translation: the world association of platinum investment



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Due to their close chemical proximity and close interchangeability in industrial applications, platinum and palladium usually move in opposite directions, with prices of one falling as prices of the other rise.

Platinum and palladium, the "two missing links" in Australia's world-class commodity chain, are coming back into investors' sights as local projects progress and supply threats promise a surge in prices.

This week, the Julimar project from Chalice Mining (ASX: CHN) in Western Australia has stirred up interest in platinum and palladium, but against that backdrop there has also been encouraging news from Galileo Mining (ASX: GAL) and Future Metals (ASX: FME).

The three companies, along with others in the platinum group metals industry, hope to fill a 140-year gap by developing Australia's first commercially viable platinum group metals project. Platinum group metals include platinum, palladium, rhodium, osmium, ruthenium and other elements.
This will not be easy for several reasons.
As I saw in South Africa 20 years ago, platinum-group metal processing technology is very complex, and Chalice has begun to seek partners with the technical knowledge to separate the metal mixture in the Julimar ore body.

The complexity of the Julimar project has led analysts (at various times) to refer to the project as the palladium project, with palladium prices hitting US $3,100 / oz (AUD $4,630 / oz) last year but currently down to US $1,408 / oz (AUD $2,103 / oz), analysts would also call it the nickel project, Because nickel seems to be the most valuable metal in the mix right now.


Palladium's price can be volatile, as evidenced by its rise and fall over the past few years, making it important to choose the metal before building a processing plant, not an easy decision for management.


Russia and South Africa dominate the platinum group metals market
Moreover, the two main players in this tightly controlled industry, Russia and South Africa, dominate the market and their decisions can have a significant impact on metals prices.
Platinum and palladium have never been an easy group of metals to watch or an attractive entry point for investment. Platinum and palladium are twin brothers, one tends to rise and the other falls due to their close chemical relationship and mutual use in industrial applications.
Volkswagen's infamous "dieselgate" emissions fraud five years ago proved that both metals can be used to neutralise the exhaust produced by internal combustion engines, with platinum more popular in diesel cars and palladium in petrol cars.
As well as crimping demand for diesel cars, VW has killed the price of platinum (down 50% between 2015 and 2018), causing serious problems for South Africa, the world's largest platinum producer, while setting the stage for boomtime prices for palladium, which is dominated by Russia.
There are other uncertainties in the platinum-group sector, including the rise of electric vehicles (EVs) that produce no emissions (which are not good for platinum-group metals), and the growing role of platinum-group metals in clean energy, such as the production of green hydrogen.
Russia's role in platinum group metals has always been an unpredictable factor, with Citi, the investment bank, recently observing early signs that Moscow was trying to "weaponise" its control of palladium, aluminium and uranium.
So far, all three metals have been unaffected by Western sanctions imposed on Russia over the conflict with Ukraine, meaning they remain freely traded, although there are signs carmakers may have taken evasive action.
Palladium's 22% plunge to US $1,407 (AUD $2,101) from US $1,804 (AUD $2,694) three months ago can be seen as a continuation of the market's normalisation following its surge to US $3,100 (AUD $4,630) at the start of the Russian-Ukrainian conflict.
But it could also be the result of carmakers reconfiguring their production lines to use more platinum sourced from South Africa in vehicle exhaust systems, as well as limiting Russia's exposure to potential palladium exports.
Russia's next move could ignite a prairie fire in the platinum group metals sector, triggering the premium seen during the conflict with Ukraine this time last year.
Investment banks have warned that Russia could weaponise its metals exports
Citibank said earlier this month that any move by Russia to restrict exports would send shock waves through commodity markets, disrupting supply chains and causing problems for manufacturers, particularly carmakers.
Max Layton, Citi's head of commodities for Europe and the Middle East, said "the weaponisation of Russian metals exports could be imminent".

"Russia's use of gas, and recent talk of oil production cuts, has pointed the finger at commodities," he told London's Financial Times."There are other goods in between that have been forgotten."


What an unpredictable country like Russia might do to invest (never forget Winston Churchill's Russian analogy: "all wrapped up and shrouded in fog") is one reason to be cautious about PGMS.


There is also the nagging fact that Australia has tried and failed many times before to develop a platinum group metals industry, even after several years of small-cale production from alluvial material near Fifield, New South Wales, back in the 1880s.


Platinum group metals companies in Australia
This time, Chalice, with a market capitalisation of A $2.65bn, is no small cap. It is easily the most promising player in the local PGM space, but it has a few hurdles to clear, including raising capital, finding a process route to profitability, and choosing partners with the right skills.
Future Metals, with a market cap of $19 million, fits the small-cap mold, but it also faces the challenge of commercializing the Panton deposit in Western Australia's Kimberley region, which has been around for a long time, featured in one of this writer's early geology textbooks, and remains untapped decades later.
Updates from Panton, formerly Platinum Australia's major project, show promising results from drilling 350 metres beyond known resources, including a 1.5 g/t platinum group metal deposit of 22.4 metres from 786 metres down.
Shares in Galileo rose 6 per cent to $0.73 on Tuesday as interest in its latest drilling results, which saw 1.16g per tonne of platinum, palladium and gold (3E metals) at 72m, as well as copper and nickel at its Callisto project in southern WA.
For Australian investors, the platinum group metals family has been flat since Fifield went from boom to bust more than 140 years ago.
This time it might be different, fingers crossed! (Source: smallcaps)


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.


Note: This press release is selected from real-time industry news from foreign industry news websites and translated and edited into Chinese by the World Platinum Investment Association for your reference. In order to respect intellectual property rights, if any media want to reprint, please be sure to indicate the original source of the article and the source of the translation.
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