What’s driving the platinum group metals market? – Special Feature
Precious metals are naturally materialising commodities with high monetary value due to their rarity, durability, intrinsic properties, and diverse applications.
In part three of the precious metals feature series, Mining.com.au digs deep into the other lesser known suite of precious metals the platinum group metals (PGMs) – iridium, palladium, platinum, osmium, rhodium, and ruthenium.
Exceptionally rare, PGMs (sometimes referred to as PGEs) have similar physical and chemical properties and tend to occur, in varying proportions, together in the same geological deposit.
In terms of abundance in the Earth’s crust, the rarest metals are gold, platinum, osmium, iridium, palladium, ruthenium, rhodium, tellurium, and rhenium. And platinum and palladium are 30 times rarer than gold.
Of all six metals in the PGMs group, palladium and platinum are most important due to their economic values and higher quantities. The other four are mined as byproducts.
PGMs have many useful properties and therefore a wide array of applications. These include as auto-catalysts, electronics, medical tools, hydrogen production and hydrogen fuel cells, as well as in jewellery, among many others.
In fact, about 85% of palladium is used in vehicle exhaust systems, as part of the catalytic converter, turning toxic pollutants into less-harmful gases before being released into the atmosphere. Demand for hybrid cars is expected to largely contribute to demand for PGMs.
The International Market Analysis Research and Consulting Group expects the market to top US$55 billion ($85 million) by 2032, exhibiting a growth rate (CAGR) of 3.5% during 2024-2032.
PGMs: Pivotal polymetallic projects
On the production side, South Africa accounts for about 75% of global platinum supply and 40% of palladium. The country has been dealing with very deep mines (most in-country PGM mines operate at a depth below 500m), ageing infrastructure, power disruptions, and a cost of production above the selling price at many operations.
The discovery of the first platinum nuggets in South Africa dates back 100 years ago. In the latter half of the 20th century, the country’s platinum sector was dominated by three companies, which after some corporate deals had their assets eventually housed under Implats, Amplats, and Lonmin respectively.
Pivotal Metals (ASX:PVT) is one company with the high-value PGMs in its portfolio. Speaking to Mining.com.au, Managing Director Ivan Fairhall is bullish on the market and its assets, which include the Belleterre-Angliers Greenstone Belt (BAGB) projects.
Fairhall notes that PGMs are a lesser known and poorly understood market compared to other precious metals like gold and silver, which adds a level of complexity for investors.
“I think PGMs are slightly different. People have been banging the PGM drum for a while, but it’s kind of hard to get exposure to PGMs”
“I think PGMs are slightly different. People have been banging the PGM drum for a while, but it’s kind of hard to get exposure to PGMs. That’s one of the things because a lot of it is produced in byproducts. So you’ve got another primary commodity to get exposure and we’re the same in our copper projects with PGMs,” he tells this news service.
“So it’s much harder for people to hype up PGMs. A lot of people get out there and buy the physical if they want high leverage exposure to PGMs, because it’s hard to get it in mining stocks. You’ve got to have diversification across other commodities.
“And the places that have the highest leverage to PGMs, where all the PGMs come from, are these South African and Russian projects. That’s why it’s a great opportunity because they’re very risky jurisdictions, but they are not highly investable opportunities in and of their own.”
Pivotal Metals’ 100% owned Horden Lake Cu-Ni-Au-PGM-Co Project in Québec, Canada contains about 200,000 ounces of PGMs, in addition to 200,000 ounces of gold.
While it is a copper-nickel-dominant project, it contains about 400,000 ounces of precious metals. The gold and PGMs are genuine byproducts and while they will generate a small percentage of overall revenue, in a higher price environment they are poised to contribute to the asset’s economics.
In July, Pivotal’s BAGB returned ‘high-grade’ results at shallow depths in historical drilling 21.1m @ 2.66 grams per tonne PGM at Midrim.
“So actually very high on a relative basis, very high contribution from those platinum group metal metals. When you get grades like that, they start to really influence the total NSR of the project. They can become a much larger percentage of the revenue stream,” Fairhall adds.
“We have evidence of that down there on our projects. And definitely I get asked by investors a lot about PGM leverage or PGM exposure. And they’re quite interested in the relatively high PGM content down at Midrim and a lot of where we’re exploring.”
Market fundamentals ‘fantastic’
Terra Metals (ASX:TM1) CEO Thomas Line is also bullish and believes the fundamentals for platinum and palladium in particular are “fantastic”.
The company is advancing the Dante Project, located in the West Musgrave region, containing extensive outcropping copper-gold-titanium-platinum group elements-vanadium mineralised layers which are similar to coal seams.
In terms of PGMs, Line notes demand is driven by rising adoption of hybrid vehicles, which use more palladium and platinum than normal combustion engines.
As mentioned, palladium and platinum play a starring role in catalytic converters, the emissions-busting components that help vehicles meet environmental standards by turning harmful gases into less toxic ones.
Presently, about two to seven grams per unit of palladium is used in petrol vehicle catalytic converters, depending on the vehicle. The average catalytic converter contains about one to two grams of rhodium and about three to seven grams of platinum.
“People always thought that because EVs came in, palladium and platinum were going to be obsolete, but actually the demand has increased. I think the outlook’s very good,” Terra’s CEO tells this news service.
“There is a desire for supply to come online in a safe jurisdiction, Western suppliers in allied nations like Australia. You’ve got South African and Russian dominance of supply of those metals. South Africa has major issues with labour shortages, Russia has power outages, and other socio-political challenges which make production difficult.
“There is a desire for supply to come online in a safe jurisdiction, Western suppliers in allied nations like Australia”
“Russia obviously has issues where they may not be an acceptable source of metals for certain Western use because people don’t want to rely on Russia for supply of any critical metal like those now critical metals.”
Terra Metals’ Dante Project contains almost half a million ounces of gold, 880,000 ounces of platinum, and 330,000 ounces of palladium. It also has 22 million tonnes of titanium, 270,000 tonnes of copper, and 800,000 tonnes of vanadium.
The maiden resource estimate is 21 million ounces of palladium equivalent. If Terra Metals converts the resource into a platinum equivalent, it nears 30 million ounces.
Dante’s maiden resource dwarfs that of Chalice Mining’s (ASX:CHN) 2021 Julimar Nickel-Copper-PGE Project maiden resource, which came in at 10 million ounces Pd+Pt+Au (3E), 530,000 tonnes of nickel, 330,000 tonnes copper, and 53,000 tonnes of cobalt.
Julimar was a company-maker that saw Chalice Mining’s share price rocket from $0.20 cents pre-discovery to reach a peak of more than $9 – before falling significantly. Its share price at the time of writing was $1.72.
To date, Terra Metals has drilled less than 5% of the Dante deposit, meaning its true size and scale could be significantly larger.
Power of polymetallic projects
In North America, Power Metallic (TSX-V:PNPN) is an exploration company focused on advancing the Nisk Project Area (Nisk-Lion-Tiger) – a ‘high-grade’ copper–PGE, nickel, gold, and silver system – towards Canada’s next polymetallic mine.
The company is expanding mineralisation at the Nisk and Lion discovery zones, evaluating the Tiger target, and exploring the enlarged land package through successive drill programs in Québec.
CEO Terry Lynch recalls a conversation with renowned investor Eric Sprott who was asking about the metals make up of the company’s flagship asset.
“I said, ‘Well, we think long term it’s going to be a third nickel, a third copper, and a third precious metals’. And he (Sprott) says, ‘Yeah, I know that’s long term, tell me about Lion, what is Lion?’ And I had to think about it for a second. I was thinking about Lion right now,” Lynch tells Mining.com.au.
In fact, the company’s Lion deposit is about 45% copper and 55% precious metals – of which roughly 40% of the latter is PGMs – or PGEs as they are known in North America.
With Nisk holding 9-13 million tonnes copper equivalent grading at 5-7% copper equivalent “Nisk is probably a phenomenal way to get exposure to PGMs that people don’t have”, Lynch tells this news service.
“Right now, at current PGM prices, if you’re just a PGM discovery it’s tough, still tough, even though it’s gone up about 25%. If you look at the charts, boy, the charts in the PGMs look fantastic to me. I mean, if you’re a chartist, you gotta like that chart. I think it looks like it’s obviously retesting a bit right now, but it definitely looks like it could rip.”
At the time of writing, platinum was trading at US$1,349 a troy ounce, palladium US$1,136, while rhodium was US$7,425, iridium US$4,675, and ruthenium US$925 per troy ounce, according to UK-based speciality chemicals company Johnson Matthey.
Since May 2024, the PGMs market has seen a recovery, with platinum prices surging some 33% and palladium rising about 12.5%. This recent price movement follows years of deficits that had not yet translated into higher prices — a disconnect that appears to be on the cusp of resolving itself.
Pivotal’s Fairhall agrees the price fundamentals look robust. He notes there is a lot of geopolitical uncertainty that has been conflated tied to strategic metals, which for the most part is valid.
“But definitely on a relative basis, I think that that is distracting people, they’re forgetting about the more boring commodities,” Fairhall continues.
Fairhall says with demand growth over the next 10 years, more than half comes from traditional sources and ‘boring commodities’ like copper.
“Everyone thinks copper is all about AI and electrification, like data centres and all this sort of stuff. No, it’s from poor people becoming rich. It’s from GDP growth. There are no rich countries that aren’t copper intensive.”
However, for those with exposure to lesser known or poorly understood commodities, broadly speaking, Fairhall says the market is awaiting an inflection point at the junior end.
“Short-term catalysts, well there’s a lack of conviction still in the market. Uncertainty prevails, so liquidity is important to people and that’s what the junior sector struggles from and we’re at all time low valuations of liquidity and that’s reflected in a lot of group share prices, ours included,” he explains.
Other PGMs players
The PGMs market is niche and remarkably compact compared many other metals. Annual demand for platinum remains around 7 million ounces, while palladium demand sits at 9 million ounces. This is less than 0.5% of global metals markets by volume.
In terms of the other PGMs, South African giant Valterra Platinum (JSE:VAL) – formerly known as Anglo American Platinum – is a major player in the global platinum group metals arena, particularly with its iridium extraction.
Another South African player is Impala Platinum (JSE:IMP), which has operations tapping into the rich mineral wealth of the Bushveld Complex, solidifying Africa’s position as a major contributor in the iridium market.
Russian behemoth Norilsk Nickel is also a significant producer of PGMs and also extracts iridium as a byproduct of its primary operations.
Ruthenium features in the portfolios of these aforementioned three companies too.
Rhodium is within Valterra and Impala’s portfolio, with other companies such as Artemis (ASX:ARV), Eastern Platinum (TSX:ELR), and Zimplats (ASX:ZIM) among some of the other players.
Osminium features in the portfolios of the usual suspects with some other players including BASF, Celanese International, Northam Platinum, and Sibanye-Stillwater.
Write to Adam Orlando at Mining.com.au
Images: Mining.com.au, iStock & Johnson Matthey
