Platinum group metal (PGM) prices fell further on Friday after Thursday’s rout as US President Donald Trump’s sweeping tariffs on imports to that country took effect.
Investors expect the 25% tariff on all vehicle imports will drive up car prices in the US, slowing domestic demand and spurring carmakers worldwide to cut production.
That is expected to result in lower and more volatile near-term demand for PGMs, which are used in the production of catalytic converters for internal-combustion engines.
By 7pm on Friday the platinum price had fallen 3.55% to $918.70/oz, after a drop of 3.19% on Thursday. The metal was last trading at $921/oz.
Anglo American Platinum shares slumped 14.28%, the lowest in about a month, while Impala Platinum plunged 17.18% to R91.65 — the most since March 2020. Northam gave up 17.35% and Sibanye-Stillwater 15.57%.
The drop in prices is a severe headwind for SA’s mining industry, which has pinned its hopes on a recovery in PGM prices after already challenging market conditions saw the sector shed nearly 7,000 jobs in the second quarter of last year.
PGMs, with coal, gold, manganese and chrome are excluded from the 30% reciprocal tariffs on SA imports which Trump announced on Wednesday, but the real concern is the blow Trump has dealt to business and consumer sentiment, said the Minerals Council SA.
“Despite the exclusions, we remain concerned about the adverse effect on business and consumer sentiment and the resultant feedthrough to business investment, consumer spending and ultimately global real GDP growth caused by this unprecedented upheaval in world trade,” said Hugo Pienaar, the council’s chief economist.
“Global growth coming under threat is bad news for the entire SA mining industry.”
Last year PGMs accounted for 76.3% of the total R65.3bn in mineral products and precious metals that SA exported to the US.
Positive long term
Despite the near-term volatility, the council said it remained positive about PGMs’ long-term demand and price outlook, given their use in internal-combustion engines, the green hydrogen economy and jewellery.
SA is home to an estimated 77% of the world’s PGM reserves, and is the world’s leading source of manganese, chrome and vanadium, which are all expected to play important roles in the energy transition.
The mining industry also provides some shelter to the SA economy amid the ongoing disruptions to global trade — particularly the record gold price, which may continue rising on safe-haven demand.
Everything we’re currently seeing across the world is protectionism for critical metals, and that’s going to grow.
— Richard Stewart, Sibanye-Stillwater CEO designate
When asked about Trump’s reciprocal tariffs at a platinum conference in Johannesburg last week, Sibanye-Stillwater CEO designate Richard Stewart said that despite the short-term risk, tariffs opened doors for SA to leverage its critical mineral reserves and bargain for better prices down the line.
“Everything we’re currently seeing across the world is protectionism for critical metals, and that’s going to grow. The strategic opportunities are becoming less about friendly relations and more transactional,” said Stewart.
The group’s Stillwater mine in the US is set to receive R4.8bn in government subsidies under the Inflation Reduction Act’s 45X tax regime, which aims to grow the US’s domestic production of critical metals.
Nearly half the losses which the Stillwater operation is now experiencing would be covered by 45X.
“We don’t believe it’s at significant risk at all because it’s embedded in the law. In fact, it’s aligned with what Trump is trying to drive, which is protectionism and self-generation of critical metals,” Stewart said.
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