The rarity of platinum, combined with a decline in supply and overwhelming demand, is a formula for a build-up of a “perfect storm”, says independent precious metals consultant Dr David Davis, who says that this will lead to significant upward pressure on the price of platinum, to which investors have already begun to react.
Given that platinum plays a critical role in the reduction of global warming and its essential role in diverse industrial and medical applications, global mine supply of the precious metal has grown at a compound annual growth rate (CAGR) of about 1.7% between 1990 and 2020.
In 2019, global mine supply was about 6.1-million ounces, according to research done by science and chemicals company Johnson Matthey (JM). Mine supply is, however, not without risk, as it depends heavily on the South African platinum group metals (PGMs) industry, which supplies about 72% of global platinum.
Global mine supply between 2006 and 2019 declined by a CAGR of 1%, while South African platinum supply declined by a CAGR of 1.4% mainly owing to the historical evolution of the mining mix ratio of the PGM reefs in South Africa
Given that platinum plays a critical role in the reduction of global warming and its essential role in diverse industrial and medical applications, global mine supply of the precious metal has grown at a compound annual growth rate (CAGR) of about 1.7% between 1990 and 2020.
In 2019, global mine supply was about 6.1-million ounces, according to research done by science and chemicals company Johnson Matthey (JM). Mine supply is, however, not without risk, as it depends heavily on the South African platinum group metals (PGMs) industry, which supplies about 72% of global platinum.
Global mine supply between 2006 and 2019 declined by a CAGR of 1%, while South African platinum supply declined by a CAGR of 1.4% mainly owing to the historical evolution of the mining mix ratio of the PGM reefs in South Africa
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In a presentation authored by Davis, he notes that the PGMs industry has also been “starved” of expansion and ore reserve replacement capital for a number of years, though miners are now beginning to invest in reserve replacement.
While this quantum of investment is unlikely to stave off the decline in platinum supply, Davis notes that growth in platinum recycling from 2011 to 2020 has also remained relatively flat at an average of 1.2-million ounces.
“The quantum of platinum autocatalysts recovered by recycling is not expected to grow [up to] 2025 as platinum loadings are historically lower in light vehicles that are about to be scrapped, given the average age of light-duty vehicles being around 12 years.”
In comparison, Davis says the quantum of palladium autocatalysts recovered by recycling is expected to climb to over four-million ounces by 2025 from about two-million ounces at present.
This observation is important in that Davis says platinum secondary recycling supply will not likely support the expected decline in primary mine supply, thereby tightening platinum supply in a climate of ever-increasing demand.
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While this quantum of investment is unlikely to stave off the decline in platinum supply, Davis notes that growth in platinum recycling from 2011 to 2020 has also remained relatively flat at an average of 1.2-million ounces.
“The quantum of platinum autocatalysts recovered by recycling is not expected to grow [up to] 2025 as platinum loadings are historically lower in light vehicles that are about to be scrapped, given the average age of light-duty vehicles being around 12 years.”
In comparison, Davis says the quantum of palladium autocatalysts recovered by recycling is expected to climb to over four-million ounces by 2025 from about two-million ounces at present.
This observation is important in that Davis says platinum secondary recycling supply will not likely support the expected decline in primary mine supply, thereby tightening platinum supply in a climate of ever-increasing demand.
Read more......
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