PRINCE MOPAI: SA’s PGM industry — navigating challenges and seizing chances

SA’s platinum group metals (PGMs) industry, a cornerstone of the nation’s mining sector, is grappling with significant challenges stemming from structural and cyclical factors. Structurally, the PGM market is under pressure due to the growth of electric vehicles (EVs), which has reduced the need for PGM-based catalytic converters. Cyclically, the car market is under pressure from high interest rates; sales volumes remain below 2019 levels in many markets. The combination of these factors contributed to an 8% decline in platinum prices and an 18% drop in palladium prices last year. 

However, recent price increases in the two metals (up 7% and 4% respectively) alongside a more than 10% rise in PGM stocks, indicate renewed investor confidence and early signs of growing demand. These developments highlight the dynamic nature of demand and supply factors that continue to create opportunities and challenges for key PGM companies in the industry. 

Given that the automotive sector accounts for 40% of global platinum consumption and 81% of palladium usage, the automotive industry remains a key driver of PGM demand, hence the evolution of this sector is important. While the rise of battery electric vehicles (BEVs) threatens demand due to their lack of catalytic converters, several factors are moderating this impact. These include slower BEV adoption, the growing demand for hybrids, as well as a number of macroeconomic, trade and regulatory factors. 

For BEVs, concerns about potential subsidy reductions, limited charging infrastructure and unattractive resale values for second-hand BEVs, have slowed their growth. Consequently, carmakers are revising or delaying EV production plans. Plug-in hybrids, and range-extender EVs, which still require PGMs, are gaining market share globally. In China, for example, which accounts for about 32% of the global car market, these vehicle types have outpaced BEVs in growth, offering a temporary buffer for PGM producers, albeit at lower PGM loadings than in the West. 

Turning to the cyclical factors affecting supply and demand for PGMs, interest rate movements in particular influence PGM demand. Lower rates can stimulate industrial activity and automotive sales, thereby supporting PGM demand. It seems likely that interest rates will fall, and fiscal stimulus should support the European car market into the second half of 2025. 

The EU’s recent decision to relax CO_₂ emissions regulations for carmakers aims to alleviate pressure from potentially incurring significant fines for noncompliance. Car manufacturers globally have welcomed this change. By balancing competitiveness and environmental goals, this move is expected to boost demand for PGMs, as carmakers continue investing in emissions control technologies. 

More recently, the US government’s proposed tariffs on car imports, set to take effect on April 2, could also affect demand for PGMs. Higher vehicle prices may lead to reduced car sales, directly affecting platinum and palladium demand. 

Against the backdrop of the market challenges, the following big SA PGM producers are responding to and adapting to remain profitable while maintaining longer-term sustainability of their respective operations:

• Sibanye-Stillwater is restructuring its US PGM operations to improve efficiency and reduce costs amid weak platinum and palladium prices. This includes optimising operations, reducing staff, and leveraging SA assets to stabilise revenue.
• Anglo American Platinum is undergoing a transformation, planning to spin off from its parent company by midyear. The company aims to attract new investors through a secondary listing on the London Stock Exchange. While BEVs have dampened PGM demand, Anglo American remains optimistic about platinum’s role in hybrid vehicles and potential applications in hydrogen transport. 
• Impala Platinum has halted new mine expansions and projects in SA and Zimbabwe due to declining profits and uncertainty about future PGM demand. 

Despite these uncertainties, thus far in 2025, the PGM market is showing signs of recovery. Though still early in the year, these gains suggest potential for demand revival. Factors such as the resilience of hybrid vehicles, ongoing industrial applications, and possible shifts in market sentiment could provide further support.

The SA PGM industry stands at a critical inflection point. While supply constraints and strategic adaptations by major producers may support prices, the sector faces persistent challenges from shifting automotive demand, trade policies and regulatory changes. Investors must balance short-term opportunities with long-term structural shifts shaping the future of PGMs. The industry’s ability to adapt and innovate will determine its trajectory in an increasingly electrified and regulated global market. Despite the current challenges, the cyclical nature of the sector and potential market upturns could support a recovery in PGM demand and price stabilisation. 

The unbundling of Anglo Platinum will cause the PGM sector to be upweighted in indices, while SA fund managers are already underweight the sector according to the Bank of America Fund Manager Survey. Any positive change in PGM demand from the slowing of EV sales outside China could cause the sector to outperform low expectations. 

• Mopai is equity analyst at All Weather Capital.