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Navigating challenges and prospects in South Africa’s platinum mining industry amid global shifts in demand

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The global platinum mining industry is navigating turbulent waters, with South Africa, its largest producer, experiencing significant challenges. Platinum, a metal over 30 times rarer than gold, holds critical importance in the energy transition, particularly for technologies like electrolysers and fuel cells.

In 2023, the World Platinum Investment Council reported a sharp increase in global platinum demand, reaching 8.009 million ounces (moz), a 25% surge from the previous year. However, supply plummeted to 7.131 moz, marking the second-lowest figure since 2013, exacerbated by the disruptions of the Covid-19 pandemic in 2020.

This supply-demand imbalance plunged the platinum market into a notable deficit of 878,000 ounces for the year, culminating in quarterly shortages, including 74,000 ounces in Q4 2023. Despite this deficit, global platinum prices remained stable in 2023, averaging $1,060.2 per ounce, albeit showing only a marginal increase of 0.5% due to economic uncertainties and subdued automotive industry demand.

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However, the outlook for 2024 is less optimistic, with prices dipping to an average of $1,015.8 per ounce by January, a 6.9% decline year-on-year. Analysts from GlobalData anticipate further price decreases, forecasting an average of $940 per ounce for the year.

The primary driver behind these price declines is the sluggish performance of the automotive sector, which uses platinum extensively in catalytic converters. A downturn in car sales has led to reduced demand for platinum, intensifying the economic pressures on the industry.

Looking ahead, platinum demand is projected to decrease by 6% in 2024 to 7.507 moz, accompanied by an anticipated deficit of 418,000 ounces. Concurrently, total global supply is expected to diminish by 1% year-on-year to 7.09 moz.

Global production landscape

South Africa, Russia, Zimbabwe, Canada and the US collectively accounted for 96% of global platinum production in 2023, totaling 5.9 moz. However, production forecasts for 2024 highlight significant challenges, particularly in South Africa and Russia.

South Africa, the largest platinum producer, is projected to see a 0.6% decline in production to 4.3 moz in 2024. Operational constraints such as limited electricity supply, labor issues, and price volatility are key factors contributing to this decline. Despite these challenges, the resumption of operations at the Bokoni project and the commencement of the Platreef project are expected to partially offset these reductions.

Conversely, Russia anticipates a substantial 10.7% decrease in platinum production to 660,600 ounces in 2024. Operational disruptions at Norilsk Nickel’s Nadezhda plant in 2023 due to delayed equipment deliveries have impacted output significantly.

In contrast, the US, Zimbabwe, and Canada are poised to increase production in 2024, with the US expecting a 10% rise primarily driven by expansions at Sibanye Stillwater’s East Boulder and Stillwater mines.

South Africa’s challenges

South Africa’s platinum production reached 3.94 moz in 2023, marking a modest 1% increase year-on-year. Key mines such as Impala, Marikana, and Mogalakwena contributed significantly, although output remained below pre-pandemic levels and the industry benchmark of 4 moz.

Persistent price pressures have compelled PGM (platinum group metals) miners in South Africa to implement cost-saving measures, including job cuts and investment delays. The recent volatility in metal prices, including a sharp decline in palladium and rhodium prices, further underscores the industry’s fragility.

“Global platinum production declines in 2024 are aligned with expectations, particularly amidst the challenges faced by major producers like South Africa and Russia,” commented Vinneth Bajaj, a mining analyst at GlobalData. “South Africa’s restructuring efforts and Russia’s geopolitical dynamics will likely impact platinum output going forward.”

Despite these challenges, South Africa is expected to maintain its position as the largest global platinum producer, contributing over 70% of the market with 4.3 moz in 2024.

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