Focus on South Africa’s critical PGMs supply role increasing – Implats

Picture from Impats of Emma Townshend

Implats executive corporate affairs Emma Townshend

2nd September 2021

By: Martin Creamer

Creamer Media Editor


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JOHANNESBURG ( – The critical role South Africa plays in the supply of platinum-group metals (PGMs) is gaining increasing focus, Implats said on Thursday.

Following a period where South Africa’s relevance and the country’s importance tended to be discounted on the assumption that sourcing could be done from mainly recycling, provision for the new hydrogen vision has highlighted South Africa as a critical PGMs provider to ensure future growth.

“If we take a step back,” Implats executive corporate affairs Emma Townshend said in response to Mining Weekly during question time after the JSE-listed company reported record financial results, “South Africa was recognised for a long time as the largest global primary producer of PGMs relative to Russia, where PGMs are the product of base metal mining.

“But post the global financial crisis, in 2007/2008, what you saw was a huge increase in the provision of metal from the secondary markets, essentially recycling.

“You can see the extent to which the market discounted South African supply, because essentially the price being paid for our metals wasn’t what the market would call an incentive price. So, essentially the margins were too weak to either maintain the production base or incentivise replacement or growth.

“But if you look at future demand, particularly related to hydrogen, the metals that were linked to the hydrogen economy are platinum, iridium and ruthenium, and South Africa is by far and away the most dominant producer of those metals.

“So, I definitely think that, if we think about the conversations we have with our customers – after a kind of drought where our relevance and our importance in providing metal to this market was kind of discounted because there was assumption you could get it elsewhere – the conversations now are about the need of South Africa to provide those metals for the hydrogen economy, and the growth that all our customers and international markets and governments seek for that.

“We think there’s been a shift back to the importance of the South African production base, the extent to which we are investing, the extent to which we can supply those metals to feed that future growth,” said Townshend.


In response to questions on the market and the impact on PGMs demand of the current shortage of electronic chips needed by the automotive industry, Townshend added: “Obviously, auto buying is huge. If we look at the make-up of the demand for our primary products, you're talking over 80% to 85% palladium and rhodium demand coming from the auto market and over 40% coming from platinum, and I think the chip shortage is a situation that continues to evolve.

“It’s fair to say that the impact and the timing of the impact has been underestimated by market commentators, so it’s a bit of a moving target.

“I think it’s also coincided with what is traditionally a reasonably strong period of refined supply from the industry, managing results into year-end and we’ve had a couple of issues with the industry in terms of releasing pipelines.

“We tend to look at these balances on an annual basis but actually inter-quarter or inter-month, you can have quite big mismatches in terms of the metal being offered and the metal being demanded. It’s definitely something that we’ve seen play out.

“When we look at our customer base and what we’re seeing, we always think it’s important to caveat that ultimately we sell our production basket. We won’t sell an auto basket, we’ll sell what we produce, and we do think that in the current market environment, where you’ve had big interruptions to liquidity since Covid, that our customers are very comfortable taking metal from us on a monthly basis in terms of those annual contracts because essentially it smooths some of the price volatility that you’re seeing in the spot market.

“Suffice to say that we continue to see very strong demand from our customer base for metals that we produce. The timing is tricky. We buy-in. We obviously speak to customers. We’ve seen increased downgrades to 2021 production forecasts. I think what’s really important is that the bulk of that has seen a deferral of increased volumes into 2022 and 2023.

“The bigger-picture auto story is of a market recovering from the impact of Covid, which is positive for volumes over the medium term, and it’s also a market that is benefiting from tighter legislation.

“It’s a bit of a perfect storm at the moment with a couple of very specific demand and supply factors but it does create increased demand, we think, in 2022/2023 as that very vital auto industry recovers production to pre-pandemic levels, inventories normalise across the supply chain.

“So, we see this more as a short-term issue and it certainly hasn’t massively impacted our medium- to longer-term view of auto, which is reasonably positive despite the very well recognised headwinds that longer-term electrification of the light-duty fleet represent,” Townshend added.

Edited by Creamer Media Reporter



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