South African platinum group metals (PGM) producers will influence global refined supply, which is expected to firm up by 1% next year, with Northam Platinum, Impala Platinum (Implats) and others holding excess inventory.
In 2025, world platinum supply will grow to 7.3 million ounces. Refined mine supply for the year will likely “depend heavily on the volume of semi-finished inventory that South African producers” are able to release, said the World Platinum Investment Council (WPIC) in a new report yesterday.
Implats and Northam, which recently undertook a smelter maintenance “hold excess” semi-finished inventory.
As at the the 2024 third quarter, Implats was holding 230 000 ounces of inventory while Northam had about 60 000 ounces.
Implats and Northam estimate that it may take up to three years to fully release this inventory although the rate of release for 2025 is expected to play a significant role in shaping global mine supply levels.
South African PGM producers have been raising production as they eye lower costs due to dissipating inflationary pressures.
“In South Africa, while input cost inflation has stabilised in 2024, persistently low PGM prices continue to challenge higher-cost producers,” said the WIPC.
“Due to the low pricing, major projects originally scheduled to contribute production, such as the Two Rivers Merensky project and the Platreef project, have been deferred or placed on care and maintenance.”
Despite the waning inflationary pressures, cost-cutting measures are being implemented across the domestic PGM sector, with around 9 000 jobs eliminated.
WIPC said that at current PGM prices, the profitability of several South African operations remained marginal amid heightened price sensitivity. Worse still, the WIPC said should PGM prices decline further, additional restructuring may become necessary, posing a downside risk to the 2025 mine supply forecasts.
Premised on this, 2025 forecast mine supply for platinum is expected to decrease by 2% year-on-year to 5.55 million ounces “due to lower output from South Africa” and North America.
South African mine production is forecast to be lower by about 71 000 ounces or 2% in 2025 compared to the current year, with mine and operational “restructuring initiatives to curtail unprofitable ounces” set to impact output.
“Additionally, South African supply is likely to see less benefit in 2025 from releasing pipeline stocks than 2024. North America is the second largest contributor to lower mined supply, as the Stillwater West mine is placed on care and maintenance,” noted the WIPC in its latest report.
Despite an improvement in electricity supply, miners in South Africa remain concerned about the cost of electricity, which they say is high. Over the past two years, South Africa’s load curtailments were largely managed by flexing smelter utilisation. With stable power supply, smelter availability for the South African producers has improved.
In the 2024 third quarter, the world platinum market swung into a surplus of 260 000 ounces for the first time this year. This has been attributed to improved supply, especially refined mine production, and lower demand.
South African miners accelerated work in process inventory release to see global mine supply increase by 7% year-on-year for the quarter to 1.4 million ounces while supply from scrap sources remained flat.
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