Platinum supply can’t keep up with demand

The platinum industry authority reports demand last year rose by 10% to 3.66 million oz. Supplies, however, increased by only 3% to 3.2 million oz.

South Africa, which accounts for about 80% of world production, boosted shipments by 40,000 oz to 2.56 million oz in 1988. Supplies from the U.S.S.R., which accounts for about 12.5% of the global output, remained unchanged last year at 400,000 oz.

Third largest producer of platinum is Canada, which turned out 145,000 oz last year in byproduct form, mainly from the Sudbury nickel basin.

Despite what were record total deliveries of new metal to the market, the supply deficit more than doubled to 460,000 oz, Johnson Matthey says. Last year marked the fourth successive year of shortfall, says the report, adding that the 1988 deficit was greater than those of 1985 to 1987 combined. Major applications

The two major sectors of demand — responsible for 65% of the total — were autocatalysts (pollution control devices for motor vehicles) and jewelry. Third largest sector was investment, which accounted for about 17% of platinum demand in 1988.

A key factor behind increased demand was Japanese imports of 2.17 million oz, an increase of 30% over the previous record total in 1987. Japanese imports in 1988 were equivalent to 68% of all the primary supplies available to the non- communist world.

In terms of use by sector, autocatalysts comprised the largest share at 1.325 million oz, an increase of 5.6% over 1987. Recovery of platinum from spent catalysts increased from 115,000 oz to 160,000 oz.

Western Europe consumption of platinum in autocatalysts grew steadily by 20,000 oz to reach 245,000 oz; the report foresees accelerated growth. Johnson-Matthey says that in response to the popular “green” (or pro-environment) sentiment in Europe, EEC legislators are calling for across-the- board adoption of tight U.S.-level auto emission standards.

Platinum in the jewelry sector had its best year since 1975, with global demand reaching 1.18 million oz. The continuing appetite for platinum among Japanese consumers is reported to be broadly based, accounting for consumption of 1.06 million oz in 1988.

Japanese manufacturers are increasing their design range and the quality of their marketing, and Johnson-Matthey says there seems to be further potential for growth in that country. Shortfalls to continue

The report projects shortfalls of the metal to continue for the next two or three years, although deficits may not be as large as that estimated to have occurred in 1988.

“This is likely to provide a healthy and probably stable outlook for prices, although the possibility of sharp bursts of volatility cannot be discounted,” says the report.

The current price of platinum, like that of other precious metals, has softened of late and was recently trading in the $500(US) per oz range. The price of the metal averaged $522 in 1988 in London, $556 in 1987 and $365 in 1986.

The report also comments on the five other platinum group metals (PGM) which are usually mined together: palladium, rhodium, ruthenium, iridium and osmium.

Regarding palladium, the report says demand for the metal reached 3.315 million oz in 1988, 50,000 oz greater than supply. Palladium is used in the manufacture of autocatalysts and also has application in electronics and dentistry.

The U.S.S.R. was the major supplier of palladium last year, selling 1.73 million oz to non-communist countries. That amount, representing 53% of the total primary metal which came to market, was down from 1987.

In North America, there is one producing primary PGM mine, the Stillwater operation in Montana. The mine, opened in 1987, produces palladium in a 3.5:1 ratio to platinum.

A number of companies are reported active in Canada in the search for PGM. In northwestern Ontario, exploration continues at the Lac des Isles project of Madeleine Mines (TSE). Planned is the daily processing of 3,500 tonnes ore. The concentrate is to be trucked to Thunder Bay, where a matte will be prepared and shipped to Calgary, Alta., for refining.

International Platinum (TSE) has about 20 projects on the go, with the most promising reported to be the Big Trout Lake property in northwestern Ontario. Exploration there to date indicates palladium occurs in a 2:1 ratio to platinum. Other Canadian exploration plays include two in British Columbia belonging to Longreach Resources (VSE).

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