17 April 2012
14:59 IST
PGMs · South Africa
Platinum production plunges in South Africa
Shaft closures, safety stoppages and industrial action removed ounces from a platinum supply base that has almost no alternative source.
PGMs · 2011 – 2016
Platinum news archive — palladium and South African supply, 2011–2016
Platinum and palladium are the only metals in this archive whose price is set almost entirely by supply, and whose supply sits almost entirely in two countries. That concentration is the whole story of the years covered here.
1 restored dispatch 2011–2016 covered
Platinum news archive: palladium and the supply-side metals
Gold and silver prices are argued about in terms of demand: monetary demand, investment demand, jewellery demand. Platinum and palladium are different: the demand side is relatively predictable, dominated by autocatalysts and industrial use, while the supply side is concentrated enough that a single country's labour relations can determine the annual balance. That inversion is why the platinum news in this archive reads unlike any other section. Its recurring subjects are shafts, safety stoppages, wage rounds and refining backlogs.
It also explains why the platinum market news of the period has a longer shelf life than gold price commentary from the same period. A forecast for the platinum price in 2013 is now a curiosity. A record of which shafts were closed permanently in 2012 and 2013 remains relevant, because those ounces never came back and the supply base is still the smaller one those closures produced.
Where to check this
This page is current writing, so its mechanisms can be checked against the bodies that publish them. Figures inside the restored dispatches stay as filed.
- World Platinum Investment Council Platinum Quarterly, which carries platinum mine supply and automotive demand.
The strike years
The platinum news of 2012 to 2014 is dominated by interruption: South African production stopped repeatedly, and in 2014 for a strike lasting five months, the single largest supply interruption in the entire period this archive covers, in any metal. The immediate price response was smaller than the tonnage lost would suggest, because above-ground stocks and recycled metal absorbed much of the shortfall. The lasting effect was structural: producers used the disruption as the occasion to close shafts they had already judged uneconomic.
The platinum news filed at the time is contemporaneous, which means it records both the expectation of a supply squeeze and the fact that it did not arrive on schedule. That gap between a real supply loss and a muted price is one of the more instructive things in the file, and it is the kind of thing retrospective accounts tend to smooth over.
Recycling and the second supply source
Unlike silver in electronics, the platinum and palladium in an autocatalyst is worth recovering, and a mature scrap industry exists to do it. Recycled supply is the reason a five-month strike did not produce a five-month shortage, and it is the main structural difference between the PGM market and the gold market. Several dispatches in this section treat scrap as a supply category on equal footing with mine output, which was ahead of the general platinum market news of the time.
For the industrial-demand comparison across all four metals in a single year, see the demand split on the homepage. For the mine-level stories behind these figures, see the mining section.
The episodes this section covered
2011–2016- January 2012 Labour disruption at Rustenburg lifts platinum sharply, establishing the pattern for the next three years: the price responds to South African labour news faster than to demand data.
- April 2012 South African output falls sharply as shaft closures, safety stoppages and industrial action combine.
- 2012 – 2013 Continued labour trouble keeps platinum in focus. Producers begin closing high-cost shafts permanently rather than waiting for a price recovery.
- 2014 A five-month platinum strike removes a substantial share of annual world supply. It is the largest single supply interruption in the period the archive covers.
- 2015 – 2016 Industrial and autocatalyst demand indicators, rather than labour news, return as the main subject as the market absorbs the lost ounces.
Restored pgms dispatches
original addresses, original dates Full indexWhat the platinum and palladium file holds from 2011 to 2016: South African output figures, the strike and shaft-closure years, and the autocatalyst demand that decides how much PGM the world needs.
Questions about pgms in this archive
Why is platinum supply so concentrated?
Because the geology is. Economically minable platinum-group deposits are overwhelmingly in the Bushveld Complex in South Africa, with a much smaller share from Norilsk in Russia and modest by-product output from nickel mines in Canada and Zimbabwe. There is no fourth source of consequence. That is why a labour dispute at a handful of South African shafts moves a world price in a way that no single gold mine ever could.
What is the difference between platinum and palladium demand?
Chiefly the type of engine. Both are used in autocatalysts, but platinum has historically dominated diesel applications and palladium petrol ones, so the two metals track different parts of the vehicle market. Platinum also has a jewellery and investment market that palladium essentially lacks, while palladium's demand is almost purely industrial. Over the period covered here their relative prices moved substantially as the diesel and petrol mixes shifted.
Why do shaft closures matter more than a strike?
A strike removes ounces temporarily; a closure removes them permanently. During these years South African producers began shutting high-cost shafts outright rather than idling them, on the grounds that the ounces were unprofitable at any plausible price. Restarting a deep shaft that has been allowed to flood or degrade is close to a new-mine decision, so those ounces do not return when the price does. The production dispatch covers the point at which that shift became visible.
Why did a five-month strike not produce a five-month shortage?
Because mine output is not the only supply. Metal already above ground, held by refiners, producers and industrial users, covered part of the gap, and recycled autocatalyst metal covered the rest: a spent catalyst carries enough platinum or palladium to be worth recovering, and a mature scrap industry exists to do it. That is the structural difference from silver, which is dispersed through electronics in quantities too small to reclaim, and it is why the price response in 2014 was far smaller than the tonnage lost implied. The silver section covers the contrast from the other side.