SOUTH Africa’s platinum industry is forecast to triple free cash flow to about R1.7bn this year, after a major uptick in fortunes for the metal and for sister metals palladium and rhodium in 2025.
Expect, therefore, a clamour from investors for outsized dividends and, quite likely, a measured pushback from the miners. They will be urging caution for two reasons.
First, the platinum group metals (PGM) market is profoundly volatile at the moment. Industrial factors such as automaker restocking have pushed up metal prices, but there’s a strong flavour of geopolitics in the high demand as well.
Second, PGM miners have underinvested in the past, especially in resource development, leading to an expected decline in production from South Africa over the foreseeable future. PGM miners will be keen to remind investors of the need for reinvestment.
It’s for this reason that PGM companies with well-capitalised assets, such as Northam Platinum, are most favoured by investment analysts. Northam recently took PGM production through one million ounces, a doubling in 10 years. It is forecast to produce 6% more refined PGMs this year. “This incremental production is capital light … [and] should lead to superior return on equity vs the peers,” says Citi.
Valterra Platinum (formerly Anglo American Platinum) has invested R6bn in its processing assets over the past two years, improving operational efficiencies and building capacity, and has plenty of brownfield growth options. It, too, is a favoured stock, especially as it’s tended to trail shares with more leverage, such as Impala Platinum (Implats) and Sibanye-Stillwater, over the latter half of 2025.
But the sector in general is flying. “PGM equities are yet to fully price in this potential, and we thus expect the equities to rerate,” said Arnold van Graan, an analyst for Nedbank Securities. There is already evidence of this. Implats gained a fifth by late January to post an 18-year high. Northam, worth R152bn, reached a record high before this week’s platinum price correction.
Despite the gains, analysts believe the PGM share rally is far from over. “With sector margins recovering sharply from their 2024 lows and now screening close to peak levels at spot prices, it is tempting to conclude that the equity rally has largely run its course,” said Steve Friedman of UBS. “However, we believe this conclusion underestimates the durability of the current pricing environment.”
That’s because metal prices are expected to remain high, or to continue improving, while seeming to defy supply and demand fundamentals.
Take the final few weeks of last year. While the world paused for breath in 2025’s dying days, PGMs went on a bender. From December 9, the price of platinum gained 26% to post a record high, before a correction. Palladium posted a two-year high of $1,800/oz. This is by no means a record — it was nearly $2,900/oz about five years ago — but the price gain represents an extraordinary reversal in fortune, as palladium is not expected to post the same supply deficits as platinum.
“‘We live in interesting times’ is an overused idiom, but it’s certainly true at present,” said Ed Sterck, head of research for the World Platinum Investment Council in early January.
Several factors are at work in the PGM market. First, the appetite for gold’s safe haven characteristics has continued to spill into other precious metals, including PGMs. But platinum stocks among manufacturers in the automotive sector have also been “unsustainably low”, said Sterck.
Whether from investors or customers, demand for the metals is fierce. Rhodium, another PGM used in the fibreglass and ceramics industries, rose 25% to about $10,000/oz. Market indicators everywhere demonstrate the mad rush for supply.
For platinum, lease rates remain “elevated”, said Sterck, reflecting the higher borrowing cost for the physical metal. It is also in “backwardation” where the spot price of the metal is higher than its future price — an indication of the short-term pressure on supply.
But there’s not one single factor behind the PGM market’s improvement. Geopolitical factors have played a major role and will doubtless continue to exert huge pressure on metal prices as the US, Europe and China are in a three-way battle to secure as much supply as possible, partly for strategic reasons.
The US, in particular, has scurried to stockpile metals amid fears of tariffs on critical minerals. In the end, these tariffs were not implemented by President Donald Trump this month, but tariffs are his blunt weapon of choice whenever political tensions emerge, such as the battle over Greenland.
A less influential contributing factor in a tight market is Sibanye-Stillwater’s anti-dumping petition on Russian imports of palladium to the US. This is likely to be heard in the US courts over the next few weeks and is also driving some panic demand.
PGM demand is also being driven by new investment activity.
Platinum and palladium futures contracts began trading on China’s first derivatives market, the Guangzhou Futures Exchange (GFEX), on November 27. Traded volumes surged in the final two weeks of December. The June 2026 platinum futures contract averaged about 110t a day (about 3.5 million ounces) and 86t for palladium (2.8 million ounces), says RMB Morgan Stanley.
This compares to annual supply of about seven million ounces of platinum and 9.6 million ounces for palladium. GFEX implemented cooling measures to reduce speculative flows, and though volumes have dropped they remain elevated. Higher lease rates and derivative demand for the metals “is likely to have contributed to both PGM price formation and price volatility over the past month and a half,” said RMB.
Said Van Graan: “The bottom line is that we see the basket price moving higher, with one or two metals being a major feature of the rally. Price volatility is likely to persist, with significant fluctuation expected.”
Bank of America has raised its average 2026 platinum and palladium expectations to $2,450/oz from $1,825/oz and to $1,725/oz from $1,525/oz, respectively. “We continue to expect platinum to outperform palladium, underpinned by persistent market deficits,” its analysts said.