Mining companies urge government to invest in platinum markets
Pumping money into the demand side of the business could give the economy a R8.25-trillion shot in the arm by 2050
SA’s platinum group metal (PGM) miners agree that developing markets for their metals is essential, but this needs help from the government.
Speaking at the second PGM Indaba in Johannesburg, industry players outlined their thoughts on how this should happen and what sectors should be targeted to stimulate demand for platinum.
In 35 years of mining, SA has produced 221-million ounces of platinum valued at R1.2-trillion. Stimulating demand for platinum would create 1-million direct and indirect jobs and contribute R8.25-trillion to the economy by 2050, said Minerals Council SA CEO Roger Baxter.
Chris Griffith, CEO of Anglo American Platinum (Amplats), the largest source of mined PGMs, outlined a range of areas to encourage the uptake of platinum, including jewellery, investments, industrial applications and the use of the metal in hydrogen fuel-cell vehicles.
He stressed the need for the government to join producers, which have had a difficult 10 years of stagnant prices and rapidly rising costs, in investing in the promotion of platinum in jewellery and investment products, urging it to expedite the release of a platinum coin and push hard to make the metal a central bank reserve asset.
Baxter told the conference he is hopeful of an announcement in the next months of a SA platinum coin, much like the gold Krugerrand, which has sold more than 51-million coins and is a leading bullion product.
Baxter would give no further details, apart from saying the platinum coin, which many in the industry have already dubbed the Mandela coin, would have to be tailored to meet the requirements of investors in the US and Japan.
Griffith said an investment of about $20m-$30m by the government in the Platinum Guild International, which promotes platinum jewellery in countries such as China and India, and the World Platinum Investment Council, which promotes and lobbies for platinum investment products globally, would be well-placed.
SA is home to the world’s largest-known resources of platinum and supplies about 80% of the world’s needs.
While there are high hopes among some industry players and analysts that platinum, which is in a global surplus, will be used in autocatalytic devices in petrol engines, partly substituting far more expensive palladium, which is in a deep deficit, these expectations are unlikely to be realised soon, said Stephen Forrest, chair of SFA Oxford, a PGM research company.
Car companies are far more focused on avoiding large fines for violating emissions standards than tinkering with the delicate recipe of PGMs used in autocatalysts, he said.
He said jewellery is the most important lever the industry could pull to stimulate platinum demand, with China falling to 1-million ounces of demand a year from a peak of 2-million ounces despite a weak price for the metal and trading at a discount to gold.