Impala Platinum CEO Terence Goodlace has backed up the prediction made last week by Northam Platinum (Northam) CEO Paul Dunne that the platinum market is heading towards a crunch that will be triggered by sharp drops in supply from South Africa.
Speaking on a conference call held today over Implat’s results for the year to end-June Goodlace commented, “ I believe the train is coming because of the lack of investment in the platinum industry.
“We are not too far from the years 2020 to 2022 when supply from the country will drop off a cliff. I believe the big deficits we are seeing now are going to get worse. In the short-term pgm (platinum group metal) prices will remain subdued but I certainly believe there will be a big surprise in the future,” Goodlace said.
Presenting Northam’s results on August 26 Dunne predicted South African platinum production would fall below 4moz during 2017 because of declining mine production which was an aspect of the business he believed was not fully appreciated by the market which was overly focused on the demand side of the demand/supply equation.
He said the declining trend was being driven by underinvestment in replacement and new platinum mining capacity over the past decade as well as by the rising level of technical difficulty and costs involved in mining platinum at greater and greater depths.
“We think there is going to be a large fundamental gap by 2025 between platinum demand and primary platinum supply out of southern Africa which holds 80% of the world’s total platinum orebody, “ Dunne predicted.
While South Africa is by far the world’s largest platinum producer it does not dominate in palladium production where – according to Implats refining and marketing executive Paul Finney – there is also a major shortfall looming.
Finney said market deficits in palladium would continue commenting, “ palladium recycling will not plug this gap and we don’t believe ounces (stockpiled) on surface will plug the gap either. “
Implication is that automobile manufacturers may have to swing back to using greater amounts of platinum in autocatalyst from a situation where palladium was previously widely substituted for platinum in the autocatalyst needed to clean up emissions from petrol engines.
Implats’ shares rose more than 11% in trading on Thursday morning after the release of the results which met market expectations and showed the group had not only managed to increase production but had hit targets on operating cost and capital expenditure reductions. The group did not declare a dividend.
This was Goodlace’s last results presentation because he will step down as CEO by the end of November. Asked why he was leaving Goodlace replied “it’s personal. I have been in the industry for 40 years. It’s time I left and relaxed a little bit.”
Goodlace said the executive search for his replacement was continuing and commented, “we have identified a few candidates and we are doing the due diligence process. I am still on the hook until November 30.”
