Aside from the relative lag in demand and price for platinum, other platinum-group metals (PGMs) – osmium, iridium, ruthenium, rhodium and particularly palladium – are expected to develop a stronger presence in the markets after a strong 2018, says global precious metals mining company Sibanye-Stillwater business development executive VP Richard Stewart.
Speaking to Mining Weekly about the prospects of PGMs markets this year, Stewart expects this to continue this year.
“Last year, all these metals – excluding platinum – had a really good year. Rhodium had a stellar year, iridium and ruthenium had excellent years. Some metals went up more than 100%, so I think there is generally an increase in demand for the balance of these metals.
“Ruthenium and iridium are quite fickle markets, so very small things can have quite an impact on the overall supply and demand balance. I’m not aware of anything on the horizon that’s specifically going to change that.”
Certain factors have resulted in the significant oversupply and underperformance of platinum in terms of price, says Sibanye-Stillwater senior VP James Wellsted.
He cites the German automaker Volkswagen scandal, “where they were basically crooking on some of the emission tests on their diesel vehicles” as the first reason. Subsequently, there has been a shift away from diesel cars towards petrol vehicles. The internal combustion engines of these vehicles predominantly have palladium autocatalysts, resulting in increased demand for palladium, while demand for platinum is “flat to slightly lower”, he elaborates.
The PGMs industry did not initially respond fast enough to the low price of platinum, but there is now evidence of more restructuring of the industry, says Wellsted.
“There’s still a surplus of production, and it’ll take another year or two before the impact of less capital expenditure and the restructuring results in a healthier market balance.”
Stewart highlights the announcements of restructuring by platinum-producing companies Impala Platinum (Implats) and Lonmin over the past year as examples of the removal of unprofitable ounces from production. He adds that this trend will likely continue, as other companies in the PGMs industry will also implement restructuring. Despite the fact the industry is currently a difficult environment for PGMs miners and incentivising capital investment, Stewart states that rising palladium and rhodium prices have provided breathing space for PGMs miners.
Vital Growth Markets
Stewart sees the growth of the jewellery market, which uses platinum metals as a significant “swing factor”, which, while being difficult to predict and forecast, will have a noteworthy impact on PGMs demand.
“There is quite a bit of focus on driving jewellery demand by the various producers, and we recognise the importance of that. If you see prices recovering, platinum will get its place as the premium jewellery item, and that will probably increase demand, but there’s currently some risk to the jewellery numbers.”
He also emphasises the impact of hydrogen fuel cell technology on PGMs markets and the expected increased demand for regulations on heavy-duty diesel vehicles in China and Europe. While fuel cells are more of a long-term prospect, they are gaining traction in niche markets, such as stationary fuel cells used to power buildings and long-haul vehicles particularly in the East (China), and to a lesser extent the US and Europe, adds Stewart.
Meanwhile, the most significant challenge, in terms of research and development (R&D) in fuel cell technology, will be scalability and economics, claims Stewart.
“It probably revolves around the overall hydrogen infrastructure, most importantly the transfer of hydrogen . . . transporting hydrogen in the form of a stable liquid is critical to get fuel cell technology in a more prominent place in the markets because it can piggyback on existing infrastructure, unlike electronic vehicles that would require significantly new infrastructure in the form of electricity.”
Stewart describes fuel cell R&D in South Africa as limited, with only “very niche” applications that have been developed and are being encouraged by PGMs mining companies.
“There’s the application of stationary fuel cells to power buildings – I could see that developing . . . but it takes some serious political and commercial will to try to adopt these new technologies and I just don’t know if South Africa is in a position to really go after that option in earnest.”
Despite the lagging price of platinum, Stewart states that the substituting of palladium with platinum in certain products such as petrol engine auto- catalysts, as well as the advancement of fuel cell technology and a growing jewellery market, will trigger platinum demand with subsequent increased pricing.