Platinum group metals (PGMs) remain a solid investment, with the latest report of the World Platinum Investment Council (WPIC) suggesting that the metal’s forecast market deficits are here to stay.
The report comes after platinum soared to a 10-year high in June, sparking concerns that the price rally would weigh on demand or motivate miners to increase production, pushing prices down.
Instead, the WPIC forecasts suggest that neither platinum demand nor supply is likely to be shaken by the price surge.
While the recent price rally makes platinum more expensive for industrial buyers, platinum consumption has historically been relatively unaffected by short-term price volatility, said the WPIC.
Price changes also tend to take several years to affect mined production, given the range of other factors that shape platinum producers’ investment decisions and the long-time horizons of developing PGM projects.
In line with this, SA miners have responded to the recent price surge with cautious optimism, rather than rushing to boost production.
Earlier, Impala Platinum Holdings announced it would consolidate the operations of its two subsidiaries in an attempt to reduce costs in response to a weak price outlook.
In May, Impala CEO Nico Muller urged PGM producers to keep the door open for further production cuts and retrenchments, citing fears over the demand outlook for palladium and rhodium.
Against this backdrop, the platinum market is expected to record its third consecutive year of deficit in 2025, with supply falling 966,000oz short of projected demand.
These deficits are expected to continue in the next four years, with above-ground stocks projected to run out by 2029, offering a source of encouragement for SA’s struggling PGM sector.
In recent years, fears about the growing popularity of electric vehicles have put pressure on platinum demand, given the metal’s use in internal combustion engines.
Falling demand, with rising electricity costs and inefficient logistics, saw many of SA’s top PGM miners restructuring operations last year, causing the industry to retrench nearly 10,000 workers.
Biggest employer
A stable demand outlook may help the industry stave off further production cuts, protecting mineworkers from more job losses and allowing the sector to continue contributing meaningfully to the economy.
SA is home to about 70% of the world’s platinum reserves, and PGMs are by far the biggest employer in the local mining sector. The PGM sector’s weak economic contribution was also one of the main culprits behind SA’s sluggish growth in the first quarter.
Platinum’s recent surge has sparked a bull run on SA PGM miners, with investors optimistic that the uptick will provide relief to companies’ balance sheets.
Sibanye-Stillwater and Northam Platinum have doubled in value since end-December, while Impala has gained nearly 90% over this time.
Valterra Platinum, having recently demerged from Anglo American, has gained 23% in the past month, taking its year-to-date gains above 45%.
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