Platinum & Palladium Shortages Will Drive Prices.

The West has very little platinum or palladium. Only 5% of the global supply is produced in North America. World production of Platinum Group Metals is geographically concentrated: 88% of world platinum production is in South Africa and Russia (Russia 13%, Zimbabwe 5%, North America 5%); 80% of world palladium production is in Russia and South Africa.

South Africa is the largest producer of platinum in the world, with 73%-80% of known platinum reserves. Russia produces 40-50% of the world’s palladium supply (Johnson Matthey).

  • Production in South African mines is declining.
  • South African labor disputes  continue to affect supply.
  • China’s supplies of Platinum Group Metals are depleted.
  • China will increase imports from Russia.
  • Russian stock-piles are depleted.
  • Large deficits of platinum and palladium are forecast.
  • Analysts are projecting a possible ten-year supply deficit.

Platinum is a strategic metal. It is necessary in electrical, chemical, medical/ dental, glass, and turbine manufacturing; in automotive industries (catalytic converters); in petroleum refining; in jewelry manufacturing; and investment.

Platinum Group Metals (PGMs) are used in one fifth of all manufacture. PGMs include platinum, palladium,
iridium, rhodium, osmium and ruthenium.

At today’s low prices, the majority of South African miners of Platinum Group Metals (PGMs) are operating at a loss; and production is falling.

Years of violent strikes have forced platinum mine closures in South Africa’s Rustenburg platinum belt. As a result, a significant amount of production has been lost.   

The world’s largest platinum producer – Anglo American Platinum Ltd. (Amplat) – has cut employees, closed some operations (four mine shafts) and one mine. Amplat’s four Rustenburg mines account for 45% of world production.

On Dec. 8, 2015, Anglo American announced restructuring will reduce its assets by about 60%. The world’s fifth largest miner will lay off almost two thirds of its employees (85,000).

The world’s second largest platinum producer – Impala Platinum Holdings, Ltd. (Implats) owns the mine where thousands of men began a strikes as long ago as June 3, 2013. South African mining firms have been forced to trim production. Multiple strikes have crippled gold and platinum production at seven gold and platinum mines.

As a result of strikes, a 15% EXPORT TAX WAS IMPOSED January, 2015.

Less platinum & palladium will be produced in the future. Those in the mining industry in South Africa fear nationalization and greatly increased taxation. The value of platinum and palladium
will increase as less is mined.

Platinum and palladium are recommended as investment metals for large portfolios. Silver and gold are “monetary metals.” We recommend taking delivery of gold and silver coins before buying palladium and platinum coins and bars.

 By Denise Rhyne


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