THE search for alternative platinum group metal (PGM) markets has been turned up several notches by Anglo American Platinum (Amplats) which is to invest $100m in two venture capital funds focusing on technological innovation using the metal.
The Anglo American listed subsidiary will be joined by state-owned asset manager, Public Investment Corporation (PIC), which will match Amplats’ $100m commitment. The funds will be managed independently by AP Ventures led by Andrew Hinkly, a former Amplats employee and executive committee member with a track record in venture capital.
The first fund will continue to manage Amplats’ existing development projects which have been developed under Hinkly’s charge. The second will seek new projects in sectors such as hydrogen infrastructure, fuel-cell electric mobility, energy storage platforms, and water treatment solutions. Based in the UK, AP Ventures is to open a Johannesburg office. It will seek additional funds from other potential investors.
“The world needs solutions to global challenges such as renewable energy integration, resource scarcity and a growing global population,” said Hinkly in a press statement. “Technologies powered by PGMs are providing solutions to these problems in areas such as hydrogen infrastructure, fuel-cell electric mobility, water purification and medical devices.
“AP Ventures is the only fund of its kind offering investors access to these innovative, fast-growing companies built on the unique properties of PGMs.
“Our experience and industry network, combined with the support of cornerstone investors Anglo American Platinum and PIC, means we have a high performing portfolio of existing investments as well as a strong pipeline of new opportunities,” he said.
The platinum market in particular has been in the doldrums since the end of 2011 when it was trading at just under $1,000 per ounce more than its current price. PGMs have been under especial pressure in the last month as fears of a tariff war between the US and a number of other countries escalate. Analysts question whether the war will materialise but it is certainly affecting sentiment in the PGM market.
Set against this volatility, there’s the likelihood that from a primary mined supply perspective, production from South Africa will decline. Restructuring likely at Impala Platinum and Lonmin, assuming its successful takeover by Sibanye-Stillwater, could remove as much as 700,000 ounces a year of new production, according to estimates by a Bank of America Merrill Lynch report earlier this year.
Yet the demand side remains difficult to anticipate given uncertainty over the market adoption of battery-powered electric vehicles, hybrid plug-in vehicles and the deterioration in demand for diesel powered automobiles which is negatively affected PGMs used in diesel-related autocatalysis.
“We expect the platinum price will start a recovery this year, albeit a gradual one,” GFMS head Rhona O’Connell said in GFMS Thomson Reuters Platinum Group Metals Survey 2018 in June. “This is predicated on a small deficit this year of nearly 0.3 million ounces, fuelled by a contraction in supply, chiefly from the South African mining sector, coupled with rising demand,” she said. “Meanwhile the palladium price is set to exceed platinum on an annual average basis in 2018, an historical first.”
