North American Palladium Ltd. (fka PALDF)

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South African PGMs industry risks upsetting global market dynamics

9th April 2019

By: Simone Liedtke
Writer

JOHANNESBURG (miningweekly.com) – To ensure a sustainable platinum group metals (PGMs) market will require South Africa to balance its market in line with global supply, Sibanye-Stillwater business development executive VP Richard Stewart told delegates at the PGMs Industry Day, held in Johannesburg, on Tuesday.

Dubbing the market “a real basket case”, he explained that, considering market forces, the PGMs industry is “at real risk” of permanently upsetting the market dynamics through a demand destruction in palladium and an oversupply in platinum.

The South African market needs to adapt to a world that is undergoing change, Stewart told delegates, warning that “the market development solutions that created yesterday’s demand are not going to be the same solutions for tomorrow”.

Thus, South Africa needs a “dynamic structure” with the ability to adapt to the changing demand environment, he stated.

SFA Oxford director and chairperson Stephen Forrest shared a similar sentiment, in a separate presentation, in which he stated that South Africa is “essentially unguarded” in the PGMs market place.

He highlighted the need for South African producers to adapt to market conditions at a faster rate.

According to Forrest, the future demand does not favour the South African mix of palladium (34%), rhodium (8%) and platinum (58%). Instead, the market is leaning towards a demand of between 56% and 60% for palladium, between 30% and 40% for platinum and 6% for rhodium.

During his presentation, Stewart also touched on palladium supply, which is expected to remain flat with a marginal increase in line with a declining South African production. This is, in turn, offset by an increased Russian production, he added, as well as a net increase in North America owing to Sibanye's Blitz operation ramping up.

Secondary supply, meanwhile, is expected to continue growing as the life cycle of increasing gasoline cars begin to impact recycling numbers.

http://www.miningweekly.com/article/south-african-pgms-industry-risks-upsetting-global-market-dynamics-2019-04-09