THE 87% improvement in the platinum price this year was a sustainable improvement as it was supported by a supply deficit in the metal, said Craig Miller, CEO of Valterra Platinum.
In an interview with Miningmx on Thursday, Miller added that platinum had also pulled in investors searching for alternatives to gold which has hit a near-record price in real terms.
“I do think we need to recognise that, to some extent, platinum does have similar unique properties to gold in terms of its scarcity, durability, high unit value, and liquid trading platforms,” said Miller. “I suppose that means it’s been popular with investors and sometimes performs a similar role [to gold], particularly in a rising price environment.”
UBS said in a report this week that platinum was attracting buyers as a “quasi-monetary hard asset” and as a “scarcity-backed store of value”.
“There’s going to be volatility and you would expect that,” said Miller of prices. “But if you come back to the fundamentals in terms of where platinum group metals (PGMs) are used and the outlook for those metals, then it does support higher prices from where we were.”
“What I don’t think you’re seeing is frothiness,” said Miller of platinum. “I think there’s no doubt that there has been some sort of pull of PGM prices as a result of what you’ve seen in gold and the price of gold. But I don’t think it’s frothiness by any stretch of the imagination.”
The World Platinum Investment Council said in its second quarter market overview in May that it expected a third consecutive platinum deficit this year – about 850,000 ounces. Palladium is also expected to be in deficit this year.
Miller said outlook concerns about continued falling mine supply of PGMs and platinum specifically was contributing to the improved price outlook for the metals. Together these forces were “supportive of prices having moved up from where they were back in 2023 and in 2024,” he said.
The improvement in the PGM basket – with palladium gaining 33% in the past month while rhodium is up 10% over the same period – has seen the industry expand its cash margins.
René Hochreiter, an analyst for Noah Capital estimates the industry is recording an average spot cash margin of about 42% presently, driving company valuations.
Platinum shares comprise about 11% of the JSE’s All Share Index with companies such as Northam Platinum Holdings leading the way, up 215% this year followed by Impala Platinum (+142%), and Valterra (+142%). The best performer is Sibanye-Stillwater whose shares are 235% stronger this year, assisted by its significant gold production.
Miller said his company had attracted new shareholders, largely owing to the sale of Anglo American’s remaining 19.1% stake in the company. Worth R44.1bn, it was one of the largest equity capital market deals on the JSE and is perhaps one reason why Valterra hasn’t performed as well as the peer group, said Miller.