Sprott - Platinum and Palladium P112 May 2021 17:09
From Metals Daily - Sprott Podcast - And just as well we are on lots of the metals esp Platinum -"Shree Kargutkar
Certain regions in the world are a little bit better endowed than the others when it comes to a particular resource. When it comes to platinum and palladium, the two countries that stand out as the key sources of supply are South Africa and Russia. Neither of these are considered to be in the sweet spot of geopolitical risk when it comes to mining equity investments for different reasons.
South Africa has to deal with the fallout of apartheid and the continuing black empowerment initiatives occurring there, which have led to a lot of strife on the ground as it relates to how the workers are paid. For Russia, it's more of a question mark when it comes to the friendliness that particular country has towards the rest of the world and, in particular, the United States.
Almost 75% of the world's mined platinum comes out of South Africa, and around 75% of the mined palladium comes from South Africa and Russia, with the two almost splitting the share of the palladium. When it comes to individual companies operating these particular mines with the PGM focus, the majority of them are South African domiciled.
We have seen these equities really struggle all the way, perhaps until the end of 2017, 2018, because while palladium was doing well, platinum was not. As a result, the overall basket revenue, which is the combination of platinum and palladium and rhodium, was not doing too well. At the same time, these companies were facing a lot of labor strife due to the ongoing strike activities in South Africa. Since then, we have seen palladium take off, and we have also seen platinum find its footing. It has moved upwards of a thousand dollars per ounce now.
A metal that no one really talks about is rhodium. It has seen its price appreciate from just around $1000/Oz to close to $30,000/Oz right now. These three metals have helped change the fortunes of the South African mining equities. When it comes to mining equities and especially mining equities in jurisdictions like South Africa, the volatility that comes with it goes both ways. Right now, the trend is quite robust, but if we start to see any breakdowns in the price of platinum, palladium or rhodium, it's quite possible these equities may correct.
Ed Coyne
The other thing that investors are focused on now is the whole debate about inflation versus deflation. Whether it's the metals market, the general economy, the overall stock market, or the real estate market, it does seem like inflation is slowly working its way into the economy. Walk us through what that environment might look like for both metals from a pricing standpoint.
Shree Kargutkar
The one theme that keeps coming up when I speak with the CEOs of companies engaged in PGM production is just how overwhelming the demand for these metals is, particularly for palladium, and for platinum, in relation to the supply is available.
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