Harare – Despite a 15,5 percent drop in platinum group metals (PGM) production in 2020, sales were up by 40 percent as prices soared.
PGMs consist of platinum, palladium, rhodium, ruthenium, osmium and iridium. Platinum, palladium and rhodium are the primary metals of significant economic value. Their demand is diverse and encompasses sectors such as automotive, investment and fuel cells.
According to Statistics South Africa, in 2020 palladium prices increased by 43,2 percent and those of rhodium by 187,2 percent.
With regards to platinum, there was a sharp decrease in mining supply and demand worldwide in 2020. Supply was down 17 percent for the year while demand dropped by seven percent, according to the World Platinum Investment Council.
Stats SA says PGMs are the largest contributors to mining in terms of sales in the country. In contrast, coal is the most significant component of mining in terms of value added, accounting for 25 percent.
But for the first time in a decade, PGM sales overtook those of coal to become the most significant contributor to total mining-industry sales in South Africa, reaching US$13 billion – more than the value of iron ore and gold sales combined.
Overall, despite a year that saw the global economy contracting by 3.5 percent global platinum demand is forecast to increase by three percent, while supply will recover 17 percent. The World Platinum Investment Council expects demand growth in 2021 to be driven predominantly by strong recoveries in automotive, jewellery and industrial demand, offsetting reduced yet very strong investment demand.
“Investors continue to be very interested in platinum: its key roles in the hydrogen economy, to produce green hydrogen and its use in fuel cell electric vehicles, the accepted views of significant near-term substitution of platinum for palladium, and the substantial discount to both gold and palladium suggest strong future fundamentals.“While platinum investment, in bars and coins as well as ETFs, is expected to remain strong in 2021 – forecast to be above the five-year average – it may not exceed the exceptional level seen in 2020. Platinum bar and coin demand is forecast to be 15 percent lower, but still remain elevated,” said the World Platinum Investment Council.