Platinum Group Metals (PGMs)
There are several PGMs. The important ones in the BC of South Africa are platinum, palladium, rhodium, ruthenium and iridium. These are accompanied in the BC by gold and base metals (principally chrome, nickel and copper).
The PGMs of most economic importance are platinum and palladium. On the Western Limb of the BC, where SPM operates, platinum and palladium account for around 63% and 27% respectively of the total 4E PGMs occurring in the reefs.
The markets for individual PGMs are separate and the volumes traded and prices achieved are independent of one another.
The world market for platinum in 2015 was about 8Moz. Of this, 6Moz was newly-mined and 2Moz originated from recycling. The vast majority of the latter was sourced from auto catalysts and jewellery. Of mine supply, South Africa produced over 4Moz from the BC, almost 75% of newly-mined supply.
Above ground inventories of refined platinum are thought to be over 2Moz and declining. The major areas of demand during 2015 were automotive (predominantly auto catalysts) 3.5Moz; jewellery 3.0Moz; industrial 1.6Moz (chemical, petroleum, electrical, glass, medical).
Investment demand, which is usually price insensitive, was marginal during 2015.
Diesel auto catalysts utilise platinum whereas those for petrol engines use palladium. The world market for palladium in volume terms has been slightly higher than platinum (i.e. over 8Moz) for several years. Historically, its price has been a fraction of the platinum price but in recent years, this gap has been closing.
The average annual price of platinum peaked at USD2,174/oz in 2008, fell off sharply to USD1,090/oz in 2009, recovered to USD1,828 in 2011 but has been in decline since. Prices during 2016 have been typically below USD1,000/oz. At this price level, significant production volumes from much of the BC in South Africa are uneconomical and will have to be cut back.