Editorial: First platinum mine – where? who?

There’s a whole new game now.

This country is blessed with an abundance and great assortment of minerals, the production and marketing of which remain central to our continuing prosperity. And our expertise in finding and developing these is second to none.

Right now the accent is on gold because its recent price rise and ready market render that particular metal highly profitable. But what about platinum, which has seen an even sharper price increase? While our prospectors have largely ignored this in the past because of its limited demand and unstable price, this picture is changing rather dramatically. Indeed investors worldwide are now starting to see this metal as a safe and rewarding investment — one for which there is a bull market in the making.

Platinum’s fundamentals are strong, reports the respected London-based precious metals manufacturing and refining firm of Johnson Matthey. “After a long period of playing second fiddle to other factors, platinum gradually asserted its authority as the year passed, with some initial help from politico-economic developments. It re-established a premium over gold during the final quarter of 1985,” says its authoritative publication PLATINUM 1986.

Canada currently produces modest amounts of platinum as a by-product from the Sudbury nickel-copper operations (about 150,000 oz annually). Albeit this does make us the world’s third ranking platinum producer, it pales compared with South Africa’s 2,320,000 oz and the Soviet’s declining ouput of about 230,000 oz.

With the West’s demand for platinum last year of some 2,810,000 oz and rising briskly, it becomes pretty obvious that a tight supply squeeze already exists. And who is to say how long we can count on South Africa, where a very unstable political situation grows more awesome almost daily; being further exacerbated by the U.S. imposition of sanctions

This year’s supply-demand deficit in the U. S. from industrial use alone is expected to exceed 225,000 oz. But with investor demand now growing by leaps and bounds, the over-all deficit could well pass the 500,000-oz mark. And unlike most metals, inventories of the platinum group metals (pgm) are very low, save for a strategic defence stockpile of unknown size which Uncle Sam would not likely want to dip into.

While the use of platinum as an autocatalyst is by far the largest current outlet, there is a big and surging demand from astute investors and speculators for small bullion ingots and platinum coins. And like the rather sudden surge demand for gold coins, this is coming largely from Japan. (The prospering Japanese are now also heavy buyers of gold and platinum jewelry).

It was the Swiss who started minting one-ounce platinum coins. They are finding this a highly profitable business and so are expanding it. And now there are four or five other countries getting into the act, including Mexico which recently announced its intention of minting a one-ounce and fractional series of platinum coins. Nor should it be all that surprising if Canada, which has won worldwide recognition for its eminently successful minting and marketing of its ultra-pure Maple Leaf gold coins, were to get into platinum coins, too.

The exploration people in this country are starting to get the message. Indeed, prospecting for the platinum group of metals is already on the uptick as the more aggressive companies race to bring Canada’s first platinum mine into production. At this stage we don’t know just who the winner will be. But we do know that there will be a winner.