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Platinum Passion

Can South Africa grow the platinum market?

The reprieve given by palladium to platinum group metal (PGM) producers on the back of rocketing prices has injected renewed enthusiasm, with producers pushing ahead to unlock opportunities to grow their global market share.

“If we had the market for platinum, we could, by 2050, increase the size of the industry by three times,” said Minerals Council South Africa CEO Roger Baxter.

Speaking at the 2019 PGMs Industry Day, Baxter noted that according to the National Platinum Strategy for South Africa, the industry had the potential to create a million jobs, and over R8.2-trillion worth of value, between now and 2050.

The National Platinum Strategy for South Africa, developed by the Platinum Leadership Forum and comprising platinum-producing members of the Minerals Council, is aimed at addressing the current crisis and preventing further erosion of the economic capacity of the industry.

According to Baxter, in South Africa there are two scenarios on the table that the country could choose to follow – the “bubble along” scenario or actively growing the platinum sector.

If the country continued on the “bubble along” scenario, the PGM industry would see continued rising costs, stagnant global platinum demand and an employment decline of between 30 000 and 40 000 jobs. In this scenario, the economic benefits of platinum resources would not be realised for investors or citizens.

The preferred high road scenario focused on actively creating a market for product would potentially result in a revenue stream of some $35-billion by 2050, as well as contribute to procurement and export.

The high road scenario would see direct employment rise to over 400 000 people and significant revenue injection.

“Unless we grow the global market for platinum, we will not realise the benefit that is sitting in the ground. We need co-investment in market development, collaborative leadership, partnerships between all the stakeholders, a clear strategic plan and co-investment that will ensure that the benefit accrues to South Africa.”

According to Baxter, of the minerals produced by South Africa, platinum is the largest by export earnings, the second largest by mineral sales value (delivering R105bn worth of sales in 2018) and accounts for 90% of the world’s platinum catalytic converters. “Over the past 35 years up to 2015, R1.2-trillion worth of platinum (221moz) was produced.”

It is also the largest sector by employment, with a current employment footprint of 168 000 people.

Driving The Platinum Investment Agenda

“From an investment point of view, the World Platinum Investment Council continues to play a critical role in driving portfolio diversification, exchange traded funds and expanding the global coin market.”

However Baxter noted that as the largest producer of platinum, it was sad that South Africa lagged behind other countries in the production of a platinum coin.

Platinum bullion coins include the American Platinum Eagle, the Canadian Platinum Maple Leaf, the Australian Platinum Koala and the Chinese Platinum Panda, among others.

“Australians have the platypus, Canadians have the maple, the US has the eagle, the English have the sovereign, and South Africa, the largest platinum producer, has precisely no platinum coin.”

Apart from the Platinum Koala, Australia has new animal-related platinum coins depicting the platypus, frill-necked lizard, saltwater crocodile, wombat, echidna, brolga, dolphin and kangaroo.

On a positive note though, progress towards the development of a South African platinum coin was on the cards, with Baxter hoping “to make an announcement in the next few months”.

“There is no reason why a platinum coin will not be able to replicate the success of the Kruger Rand. In the past 51 years, we have sold 57 million Kruger Rands – this is a significant achievement driven by the Chamber of Mines.”

Meanwhile, together with other countries including China and Japan, which are rolling out their hydrogen agenda in earnest and driving fuel cell electric vehicle development, South African platinum producers Impala Platinum and Anglo American Platinum continued to promote technology around fuel cell vehicle development.

“Fuel cell electric vehicles have a huge role to play in trucking, bus fleets as well as ordinary commuter transport. The technology is well established but we need to work together to create the refuelling infrastructure to drive the change. We already have the first base-load fuel cell installed in Africa operating for the past five years at the Minerals Council South Africa – a 100kW fuel cell installed in December 2014 that is working really well. It contains 33oz of platinum and has been powering the building at a cheaper price than electricity from City Power,” stated Baxter, who hopes to “leverage South Africa’s BRICs relationships to drive a fuel cell agenda”.

Furthermore, he called on industry to promote platinum bridal jewellery to the lower tier cities in China (tier 2 and 3 cities) which would, he said, result in an additional demand of 350 000oz per annum.

“We are not reaching those cities because the Platinum Guild International (PGI) budget doesn’t extend that far, however if we had a collaborative budget, we could do a whole lot more on competing in those cities,” he said.

To further expand platinum and to promote the uses for platinum, industry needed to invest in research and development, Baxter said.

“Platinum can be the metal that takes South Africa through the 21st century as the leading country in Africa going forward.”

Image: ©iStock - 936418814

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