CAPE TOWN (miningweekly.com) – Platinum group metals (PGMs) react positively to the amount of money spent on marketing, in a similar way to diamonds, Anglo American Platinum (Amplats) CEO Chris Griffith said on Tuesday.
Speaking during a panel discussion on day two of the Investing in African Mining Indaba, Griffith said market development was something very unique to the PGMs industry, which could absolutely increase demand by the spending of marketing money.
This was why Amplats, Impala Platinum (Implats), Sibanye-Stillwater, Royal Bafokeng Platinum (RBPlats) and others all supported the funding of the Platinum Guild International, which markets platinum jewellery, and the World Platinum Investment Council, which markets investment in platinum.
Griffith said marketing development was the one ultimate solution for this industry, which could not cut its production too greatly.
“The solution to this industry is increasing demand and the one thing about these PGMs is that you can influence demand positively by the spend on marketing,” he said, adding that it was particularly the case in jewellery, but it was also the case in investment.
There was also a segment of the industrial uses of PGMs which could be positively influenced by marketing spend.
Implats CEO Nico Muller said the long-term fundamentals for platinum were strong and it was quite clear that there would be a significant supply/demand correction, which was incredibly healthy for investment.
Griffith said that base production would continue to decline at a time when there was no incentive price for new production and the growth projects that were under way would only, at very best, top up.
“We’ve seen over the last number of years very substantial reductions in overall supply from South Africa, with no supply response coming in from all the supply across the world,” he added.
RBPlats CEO Steve Phiri said that prices were remaining low despite the sharp decline in aboveground stock and the reduction in supply.
He said that, ironically, when there was an abundance of aboveground stock in the past, prices were strong.
“So is it supply/demand fundamentals or some other reason not being spoken about? You cannot ignore sentiment when it comes to consumption,” said Phiri.
What had been lost in autocatalysts, especially in small vehicles, had been gained in trucks, buses and off-road vehicles.
“We’re happy with the indications that we’re seeing. It’s not a very sharp increase, but gradual increases in demand. Industrial demand was up and jewellery demand would depend on new initiatives in China,” Phiri said.
Sibanye-Stillwater CEO Neal Froneman said some of the projections around electric vehicles and the anti-diesel sentiment had been overdone.
Another misunderstood aspect was that although the portion of diesel vehicles in Europe would decline, the overall car park was growing and therefore the 5% change in the diesel segment was really a very small part because there was overall growth.
“It’s a pendulum that’s swung too far one way and some of the initiatives by the industry such as real-time testing are going to put it back where it belongs,” Froneman added.