FACTS ‘N’ FIGURES — Russia and PGM prices

Russian exports of platinum group metals (PGMs) are large and exceed domestic output. This is because PGMs from state reserves are also exported to provide finance for the state budget.

The value of exports dropped to US$564 million in 1996 from US$949 million in 1995. In the opinion of market analysts from Roskill Information Services of London, England, exports fell further in 1997 because of the restructuring of the PGM sector. Roskomdragmet, the Russian precious metals committee, was liquidated in late 1996; as a result, licences to export PGMs were not issued in the first half of the year, and world prices of platinum and palladium rose significantly. Future prices of PGM will remain largely dependent on the level of Russian stocks and exports.

The Russian Federation is one of the world’s largest producers of mined PGMs. In 1996, Russia produced 90.52 tonnes of PGMs, with the Noril’sk Mining and Metallurgical Kombinat accounting for the majority — 80.8 tonnes. The past five years have seen a sharp decline in the output of PGMs from secondary raw materials: between 1989 and 1991, production of PGMs from secondary raw materials in Russia accounted for one-quarter of total PGM output, but by 1996 this share had fallen to 6%. The decrease has been caused by the decline in the processing of secondary raw materials, precipitated by the economic crisis and the breakdown of technological communication links between the countries of the former U.S.S.R.

Nevertheless, Roskill says secondary output remains important because production costs for secondary PGMs are less than 10% of the costs of producing PGMs from primary raw materials. Several government decrees have aimed at increasing the recovery of PGMs from secondary raw materials, especially electronic scrap. New capacity is being built, including capacity to process scrap military equipment.

Because reserves of rich, platinum-bearing copper-nickel ores in the Noril’sk region are only sufficient to sustain present mining rates for around 15 years, Russian production of PGMs from copper-nickel ores may fall significantly in the future. Two main projects are planned to offset this: exploitation of the Fedorovo-Panskoe deposit on the Kola Peninsula; and processing of tailings dumps at Noril’sk. The realization of these projects has been hindered by the shortage of funds in Russia.

— The preceding is from Platinum in the C.I.S., published by Roskill Information Services of London, England.