South African miners face a conundrum: increasing palladium and rhodium output to take advantage of soaring prices risks depressing the already fragile market for sister metal platinum.
That is because palladium and rhodium are mined as byproducts, with every extra ounce of the former typically coming with two to three additional ounces of platinum.
Stricter emissions standards have boosted palladium and rhodium consumption in autocatalysts for gasoline vehicles. By contrast, the backlash against diesel vehicles, where most platinum is used, has seen the metal languish.
Consequently, some of the world’s biggest platinum miners, including Sibanye Gold Ltd and Impala Platinum Holdings Ltd, are loathe to boost production, even as palladium’s eight-year supply deficit could widen next year.
“They can’t increase production because the main metal is platinum and they don’t want to make the price come down,” said Rene Hochreiter, an analyst at Noah Capital Markets Ltd in Johannesburg.
Platinum has rallied 15 percent this year from a decade low, but demand is forecast to drop next year, pushing the market back into a surplus. Palladium has jumped 41 percent this year, while rhodium has surged 144 percent.
“Expanding production to try and benefit from higher rhodium and palladium prices can be quite risky,” said James Wellsted, a Johannesburg-based spokesman for Sibanye. “Most companies seem reluctant to raise production in South Africa due to the possible impact it will have on the platinum price.”
The rally in palladium and rhodium is extending the life of older shafts along Rustenburg’s platinum belt, but producers are not rushing to invest in new mines, Implats spokesman Johan Theron said.
Boosting production would make the platinum market “even more supplied,” he said.
Given the geological and market restraints, Implats expects output from South Africa’s mines to start declining over the next five years.
New projects in South Africa would take years to develop, while those in neighboring Zimbabwe might be stymied by political and economic uncertainty, he said.
Anglo American Platinum Ltd, the most profitable of South Africa’s producers, is expected to make a final decision on whether to expand its Mogalakwena mine at the end of next eyar, Anglo spokeswoman Jana Marais said.
Unusually, the company’s flagship mine produces more palladium than platinum, but Amplats must weigh the prospects for power supply from South Africa’s troubled state-owned utility before moving forward, she said.
MMC Norilsk Nickel PJSC is one company planning to boost supplies. The world’s top palladium producer said its platinum-group metals output could almost double by 2030.
Still, there is not enough metal in the near term to close the current supply gap, Sibanye chief executive officer Neal Froneman said last month.
Other commodities:
‧Spot gold edged up 0.2 percent to US$1,467.26 per ounce, but lost 0.08 percent for the week.
‧Iron ore climbed 1.8 percent to US$86.57 per tonne, gaining 3.99 percent for the week.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS