Platinum mining in uncertain times

Platinum and chrome mining tunnels in South Africa. Credit: Sunshine…


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Platinum, a metal more than 30-times rarer than gold, has emerged as a critical mineral in the global energy transition. Platinum is invaluable in making electrolysers and fuel cells cost-competitive; however, the current limited supply cannot be increased to meet demand, which could threaten the energy transition.

According to the World Platinum Investment Council, the total demand for platinum saw a remarkable surge of 25% year-on-year, reaching 8.009 million ounces (moz) in 2023, while the total supply plummeted to 7.131moz, the second-lowest figure since 2013, surpassed only by the Covid-impacted year of 2020.

In 2023, the platinum market experienced a significant shift towards deficit, with a shortage of 878,000oz. This shortfall was observed every quarter, including a shortage of 74,000oz in the fourth quarter of 2023.

Global platinum prices remained unchanged in 2023, averaging $1,060.2/oz, as per GlobalData’s recent report, Global Platinum Mining to 2030. This was only a slight increase of 0.5% from the previous year due to concerns about global economic growth and weak demand in the automotive industry.

However, in January 2024, the prices dropped, and the average came down to $1,015.8/oz, a 6.9% decrease compared with the same period in 2023. According to GlobalData, platinum prices are expected to fall further in 2024, with an average of $940/oz.

GlobalData mining analyst Vinneth Bajaj said: “Platinum’s price slump can be attributed to a slowdown in the auto industry. Sluggish car sales translate to fewer manufactured vehicles, reducing demand for platinum, a crucial component in catalytic converters. However, with production cuts in 2024, a supply-demand shift could occur. If car sales rebound, platinum prices could stabilise or even rise.”

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Platinum is essential in catalytic converters that reduce harmful emissions from vehicle exhaust systems.

Because of weaker industrial demand, the use of platinum is anticipated to decrease 6% this year to 7.507moz. Looking ahead to 2024, a further deficit of 418,000oz is anticipated and total supply is projected to decrease further by 1% year-on-year to 7.09moz.

Top platinum-producing countries

South Africa, Russia, Zimbabwe, Canada and the US are the world’s top five producers of platinum, accounting for 96% or 5.9moz of the global total in 2023.

Platinum operations in the two largest-producing countries, and particularly in South Africa, will experience a significant decline in 2024 as companies plan to cut jobs due to revenue losses and mining accidents.

GlobalData estimates production from South Africa will decline by 0.6% to 4.3moz in 2024 due to ongoing operational challenges such as limited electricity availability, oil constraints and a price drop. However, the resumption of operations at the Bokoni project and the planned start of the Platreef project will partially offset the declines elsewhere.

Russia’s production will decrease by 10.7% to 660,600oz in 2024. This is due to lower output from Norilsk Nickel, the country’s largest platinum producer, caused by operational disruptions at the Nadezhda plant in 2023 due to a delay in equipment deliveries.

In 2024, an increase in production from the US, Zimbabwe and Canada is expected to compensate for the decline in production from Russia and South Africa. Output from the US is expected to increase by 10%, primarily due to the planned increase in production at Sibanye Stillwater’s East Boulder and Stillwater mines.

The GlobalData report shows that Implats, MMC Norilsk Nickel and Sibanye Stillwater produced more in 2023 than in the previous year. MMC Norilsk’s output increased due to ore processing with higher platinum group metals (PGM) content from the Oktyabrsky mine and improved output at the Kola refinery. Similarly, Sibanye’s production growth resulted from the steady throughput and recoveries at the Platinum Mile mine.

According to GlobalData’s latest estimates, mined platinum production is projected to decline by 3% in 2024 due to reduced output from South Africa and Russia. South Africa is expected to produce 54,000oz less, while Russia’s output is also predicted to decrease by 58,000oz.

In the early months of 2024, the production of platinum, particularly in South Africa, has experienced a series of troubling events. The once-lucrative market has suffered significant losses as prices and profits have sharply declined. The situation has been compounded by the loss of jobs due to the downturn and several mining-related accidents that have resulted in serious injury and death.

South Africa’s production slump

South Africa accounted for most of the increase in production worldwide last year, with a year-on-year rise of 1% (+26,000oz) to 3.94moz. The top platinum mines operating in South Africa are Impala, Marikana and Mogalakwena. In 2023, these mines produced a combined 1.59moz of platinum.

Growth in output from Northam offset slight declines in output from Anglo-American Platinum (Amplats) and Impala Platinum (Implats).

However, for the second year in a row, South African production fell short of the benchmark figure of 4moz, which is commonly used to measure the industry’s health. Production levels are still significantly below what they were before the Covid-19 pandemic.

PGM miners in South Africa are struggling to maintain their margins due to a sudden change in outlook after a rapid drop in metal prices. This has led to job cuts and postponement of investments. The price of palladium, which had surpassed $3,400/oz after Russia’s invasion of Ukraine, decreased by 37% last year. According to Reuters, rhodium, which had risen to nearly $30,000/oz in 2021, was trading at $4,365/oz on 19 February 2024.

“The decline in global platinum production for 2024 aligns with expectations, especially considering the challenges faced by major producers like South Africa and Russia,” said Bajaj. “South Africa is restructuring mines, and Russia’s platinum output, often a byproduct of nickel production, might be impacted by the broader geopolitical situation.”

South Africa is expected to contribute a little over 70% of global platinum production, with 4.3moz of platinum in 2024, the same level as in the previous year.

Amplats and Implats operations in South Africa

In recent years, Amplats, Implats, Sibanye Stillwater, and MMC Norilsk Nickel have been among the largest platinum-producing companies, together accounting for 5.07moz or 82% of global platinum production in 2023.

Implats announced a plan on 26 April to restructure its South African operations, potentially resulting in the loss of 3,900 jobs due to decreased metal prices.

Implats also reported a significant safety incident in November 2023, when 11 workers died, and 75 were injured in an accident at its 11-shaft operation at Impala Rustenburg in South Africa’s North West province. The conveyance system, which carried workers up and down an underground shaft 1km (3,281ft) deep, started a rapid descent while bringing workers to the surface at the end of their shift. As a result, Implats temporarily halted operations, and its shares in Johannesburg fell by 8%.

South African platinum and gold mines reported 49 fatalities last year, the lowest recorded number of deaths.

Like Implats, Amplats also plans to reduce thousands of jobs at its mines in South Africa after profits plummeted by 71% last year, as Mining Technology reported. To control expenses following a decline in the price of PGMs, the company has announced a restructuring plan that could impact around 3,700 jobs at its South African operations or 17% of the Anglo American unit’s workforce.

Last year was not the best financial year for Amplats as profits plunged 73% to R13bn ($688m) from R49.2bn in 2022. The company also cut its dividend by 81% to R21.30 per share. Total net revenues for 2023 dropped 24% to R124.58bn compared with R164.09bn in the prior year.

Despite these challenges, global platinum production is anticipated to grow at a compound annual rate of 1.3% to 6.6moz by 2030. South Africa will continue to be the largest supplier of platinum worldwide, with production projected to reach 4.5moz by 2030, according to GlobalData.

Although the future of the platinum mining industry may seem uncertain, the situation may not persist for an extended period.

“Overall, the decline in platinum production in 2024 reflects current challenges, but it is not necessarily a long-term trend. New applications and potential supply constraints could influence prices in the coming years,” Bajaj said.




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