JOHANNESBURG (miningweekly.com) – Security of platinum supply is concerning platinum end-users, Johnson Matthey GM research Peter Duncan said on Tuesday.

Speaking to Mining Weekly Online in a video interview (see attached), Duncan said the lack of capital investment even in the replacement of platinum production capacity in the last few years was making it difficult for South Africa to grow its supply at a time of promising demand prospects.

“There is some concern amongst particularly the automotive industry original-equipment manufacturers about security of supply,” he said.

A fall in productivity is estimated to have lost South Africa some 300 000 oz and further strikes or stoppages in the final quarter of 2013 could eliminate any increase in South African supplies.

Production losses owing to one-off factors such as strikes and safety stoppages totalled 100 000 oz in the first half.

The uncertainty of platinum supply comes against a forecast of rising demand from expected increased upcoming vehicle and many new phases of platinum-demand-boosting emission standards to be introduced globally next year.

Johnson Matthey, in its swansong platinum review - following Anglo American Platinum’s decision to undertake its own market development from next year - forecasts an ongoing platinum supply deficit scenario into 2014.

The end-user exasperation stems from supply certainty being needed for the design of autocatalysts for the various phases of emission legislation.

“It’s not an industry that can change quickly in terms of its design of catalysts and they are stressing a little bit about security of supply going forward,” Duncan said in the attached Mining Weekly Online video interview.

Helping to fill the supply gap are finite aboveground stocks, which cause prices to rise when they run out and result in engineers looking for alternatives.

“The whole engineering world is always looking for alternatives, particularly for platinum-group metals (PGMs) because people don’t like using them in the first place. They are pretty expensive metals.

“But the reality is that they are also pretty damn good catalysts and they are very, very difficult to replace. You can’t change chemistry. You can’t change the periodic table and find new things with the activity of the PGMs.

“So whilst we would expect people to continue to thrift PGM loadings in catalysts by being better at putting coatings down, keeping the surface area as high as possible to maximise the catalytic activity - that will continue - we would be very surprised if someone had to come along with an alternative material,” Duncan added.

In the burgeoning secondary supply sector, the growth drivers are the fact that the diesel vehicles are for the first time starting to enter the scrap market, giving rise this year to double-digit recycling growth figures.

On the jewellery recycling front, infrastructure has been developed in various countries. In Japan, there is already a well-established infrastructure for taking in platinum jewellery and exchanging it for yen.

The deficit in the platinum market is forecast to increase in 2013 to 605 000 oz, from 340 000 oz in 2012.

Higher output from Zimbabwe is expected to account for most of this year's expected 1.6% supply growth to 5.74-million ounces.

Strong offtake by industrial users and investors will lift gross platinum demand by 4.9% to 8.42-million ounces for 2013 and recycling will grow to 2.08-million ounces.

In the absence of further work stoppages, platinum supplies from South Africa may reach 4.12-million ounces by the end of 2013 – a rise of less than 1%.