Ukwazi Views

Demand for PGMs on the rise

Company benefits from PGMs demand

Article written by Sabrina Jardim at Mining Weekly

With the increase in demand for platinum-group metals (PGMs), specialist mining services provider Ukwazi’s PGMs-related projects have increased by about 20% since 2020.

Ukwazi business development director Spencer Eckstein attributes the increase to the mining and consulting services that the company’s team provides to the PGMs industry.

“We have identified critical gaps in the market in terms of mine planning, processing options and understanding underground mining techniques, and our depth of skills has placed us in a good position to service the PGMs industry.

“We also have to be aware of the Just Transition out of coal whereby, over time, we need to change the portfolio of commodities that we specialise in. Coal will remain important for the medium term, but the global shift towards battery metals is also influencing how we want to position ourselves.”

He notes that the demand for palladium, for example, is higher than some of the other metals in the PGMs basket, owing to its common use in catalytic converters whereby the price of palladium is, consequently, impacted on by the global emphasis on reducing carbon dioxide emissions to achieve net zero, as well the Russian/Ukraine war, which affects supply and demand dynamics.

However, Eckstein says there may be a potential global recession, which would hinder growth in the PGMs market, as concerns about increasing inflation, interest rates, global debts, and geopolitical issues among the US, China, Russia and Ukraine, play out.

With Russia being one of the world’s major palladium producers, there may be a drop in supply, owing to sanctions and other factors; however, other PGMs producers may ramp up production in response.

Additionally, South Africa’s PGMs industry faces challenges of energy security, owing to loadshedding, as well as transport and logistics issues.

Disruptions in energy supply are also resulting in PGMs producers having to choose between receiving unreliable supply from State-owned utility Eskom or building their own generating capacity, at a significant cost.

However, Eckstein says most PGM miners in South Africa have started implementing renewable-energy projects, with some waiting for authorisation, which will enable the industry to become self-sufficient in terms of energy supply.

“There are subtle factors that have, to a certain extent, put a premium on these metals and are creating a strong uptake in demand, but there are also some supply constraints. That is where the PGMs industry is at the moment. Platinum has broken the $1000 price mark, but rhodium and palladium are significantly higher and are expected to increase by between 4% and 7%.”

This is in line with predictions by investment research and advisory company the Edison Group, which reported in 2021 that rhodium and palladium prices were expected to remain firm until about 2025, with platinum prices expected to rise.

Consequently, as a major PGMs producer, South Africa can benefit from the increasing demand by using PGMs as a catalyst in solar photovoltaic and fuel cell technology, as well as by establishing a hydrogen economy, Eckstein explains.

He expects the mineral energy complex to become an important strategic growth point for the PGMs industry in the country, whereby using hydrogen vehicles at mines, instead of diesel-driven vehicles, can reduce diesel consumption by about 30%, which will, in turn, aid the industry’s transition to net zero.

Eckstein also expects an increase in regional integration among producers and between countries, such as Zimbabwe and South Africa, which have significant PGMs deposits.

“While there have been attempts to synchronise these initiatives between government and the mining sector, more integration is still needed. There are several plans and policies which need to be executed regarding the role of PGMs in establishing a hydrogen economy. Planning and policy are also being established around hydrogen corridors and hydrogen infrastructure,” he concludes.

Article originally published on Mining Weekly.

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