The Mapungubwe Institute for Strategic Reflection (Mistra) has launched its latest research report on platinum-group metals (PGMs), titled ‘A South African PGM Exchange: Policy Rationale for Financial Beneficiation’.

The launch took place last week at the company’s fourth yearly PGMs roundtable, in Johannesburg.

Speakers at the roundtable emphasised that, with Southern Africa, and South Africa, in particular, blessed with the lion's share of the world’s PGM resources, the region had to capitalise on this natural endowment.

Opportunities abounded in a number of sectors, such as the jewellery market. Notably, speakers indicated that, with the world entering the epoch of the hydrogen economy, South Africa could decide the pivotal role it could play.

Owing to the massive concentration of PGMs in Southern Africa and South Africa, the Mistra report argues that there is significant value to be garnered from using financial linkages to advance development.

The report explores the policy content, in terms of legislation and other statutes, within which such an exchange would be feasible.

Further, it interrogates the practicalities of setting up such an exchange, including spot and future contracts to be handled, quantification of trade, and several logistical matters that go along with the exchange’s operations.

Speaking at the event, Pan-Africa Investment & Research Services CE Dr Iraj Abedian also made the case for a PGMs exchange and greater mineral beneficiation.

He noted that, while the country boasted the bulk of the world’s PGM resources, in terms of primary supply, the percentage of its global supply share had diminished considerably, owing to secondary supply markets becoming more prominent.

Therefore, with the market shifting in this regard, Abedian emphasised the need to establish a PGMs exchange in the country, highlighting this as an important part of the country’s beneficiation strategy.

While he highlighted the need for the establishment of an exchange to be done carefully and with proper due diligence and consideration, he noted that time was of the essence, and that it had to be pursued soon.

Further, he said that this would be a long-term plan and, therefore, would require setting up a platform that would endure for the next century and beyond. He indicated that the political discourse that surrounded the pursuit of such an exchange had to be cognisant of the longevity of the proposed platform.

Abedian also emphasised the need to ensure the stability of the supply market, which would send a signal to innovators of technology and other stakeholders that they could bank on the supply of PGMs.

He also called for an undertaking to create home base demand for PGMs in technologies, which would create more demand as others followed suit on the back of these successes. In this regard, speakers from Anglo American and government have had such undertakings, with the latter having used hydrogen technology in post office vehicles, for example.

Abedian indicated that the exchange would provide real-time prices for PGMs. He emphasised that the platform would not fix the price, but, through this accessibility and transparency, would reduce the volatility of prices.

Abedian outlined the requirements that the country would need to meet to be able to execute such an exchange platform. Firstly, he noted the need for exchange credentials. Here he pointed to the JSE, which was well established and entrenched, and was recognised globally as a well functioning and well-regulated exchange. Therefore, the country had evidence of being able to run an exchange.

Secondly, he highlighted the need for a capable banking sector. He noted that the country’s banking sector was sound by global standards, indicating that, in fact, it was among the top three well-regulated banking systems, which needed to be capitalised on.

Thirdly, he highlighted the need for adequate legal capacity, which he said the country had in abundance.

Fourthly, he noted the need to be able to deliver on the actual physical quantum of PGMs or platinum, that is, having the logistical capacity to supply the demand. He noted the country had this capacity.