The World Bank’s latest commodity markets outlook came with a message of hope for platinum group metal (PGM) producers, with forecasts suggesting that prices will remain elevated for at least another two years even as SA’s mined supply steadily recovers.
The report predicts that platinum will gain 29% by end-2025 before adding 4% next year and 2% more in 2027.
Several analysts have raised their PGM price forecasts in the past week on tariff uncertainty and tight mine supply, with a growing number of precious metal investors and jewellery buyers who can no longer afford gold.
These forecasts have helped to ease fears of a price bubble, buoying confidence in local miners, many of which have slimmed down their workforces and cut costs in recent years.
Local miners are well placed to benefit from the price rally. Three years of stubbornly low prices, suppressed by fears about the switch to electric vehicles negating the need for platinum-powered catalytic converters, have forced the industry to keep a close eye on capital spending.
Miners rejoiced in June, when three consecutive years of market deficits finally worked their way into the price. Platinum surged 36% in the second quarter, its biggest quarterly gain in decades.
This run has continued into the final quarter, culminating in a more than 12-year peak of $1,745/oz in mid-October. The metal is now on track for its best year on record, up about 70% this year.
Palladium, whose price tends to mirror that of platinum, has trailed close behind. It is up 57% year to date, its best year since 2017, peaking around two-year highs last month.
“[Platinum] supply is expected to continue to fall short of demand,” said the World Bank.
The group expects modest increases in mining output from SA, the world’s largest producer.
Thousands of jobs depend on the profitability of SA’s PGM mines, which are by far the biggest employer in the local mining sector. Last year, the local PGM industry shed nearly 10,000 jobs as miners desperately cut costs and reduced their capital spending to keep output stable.
A report by Metals Focus earlier this year estimated that nearly one-sixth of global PGM production was unprofitable last year, capturing the toll that low prices took on SA’s miners.
In recent months, the tone has changed. Impala Platinum in August declared its first dividend payout in nearly two years, signalling the board’s confidence in the market.
In a similar move, Northam Platinum in June declared a final dividend nearly triple that of the previous financial year, while Sibanye Stillwater’s latest interim results show the miner strengthening its bottom line in the six months to end-June.
The World Bank’s prediction aligns with a broader market consensus that PGM prices will remain elevated.
Reuters reported last week that analysts have sharply raised their price forecasts for platinum and palladium next year, citing a shift from investment demand for gold as well as tight mine supply and trade wars.
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