The world wants it — we’ve got it

A mere six teaspoons of platinum are worth about $2 000 today. One of the country’s greatest resources, platinum-group metals (PGMs), accounted for about R79,9-billion of exports in 2007, says the Chamber of Mines of South Africa.

PGMs are South Africa’s largest export, accounting for 15% of total merchandise exports in 2007. Next came gold at R40billion and coal at R23-billion, says the chamber. PMGs include platinum, palladium, rhodium and iridium.

The industry employed 186 409 people in 2007. These workers were paid R18,4-billion in total. About 62 000 people are employed in associated industries.

The Platinum 2008 report from chemicals company Johnson Matthey reports that the country produced 5,04-million ounces in 2007. This was down from 5,3-million ounces in 2006.

South Africa holds 85% of the world’s platinum reserves, most of it in North West province in a geological feature called the Bushveld Igneous Complex. Without this resource the country’s investment prospects would be much bleaker, says economist Iraj Abedian.

”With gold reserves declining rapidly, our most considerable reserves of precious metals remain in platinum,” he says.

At current levels of consumption, Abedian says South Africa’s reserves should last for the next 70 years.

”This is a fantastic source of forex earnings given the use — of platinum worldwide,” he says.

”At present the downside is on government’s failure to use it strategically to ensure — industrialisation projects. To dig out platinum and finish it off without turning it into a national asset with massive potential for associated industrialisation is missing a historic opportunity.”

Abedian says a far more coherent policy framework is required for this to change.

The bulk of PMGs mined in South Africa are exported for motor vehicle autocatalysts, jewellery, industry and investment.

More and more platinum is used for autocatalysis as countries worldwide try to cut noxious exhaust emissions from vehicles. Autocatalysts make up 4,23-million ounces of global platinum demand, according to Johnson Matthey.

The South African catalytic converter industry produces ­16million units every year, almost all of which are exported, says Rob Boyd, executive director of the Catalytic Converter Interest Group (CCIG), a representative body for the industry. ”We represent about 15% of the global market,” he says.

Local production results in export revenue of R20-billion, says Boyd, and producers employ 5 082 people directly. About 3 000 more are employed in the supply chain.

The report suggests, however, that the prohibitive price of platinum is leading the motor manufacturing industry to use more palladium in autocatalyst production.

Boyd says this trend is more complex than it seems. ”There have been moves in this direction in the past but there are significant costs and other factors to consider,” he says.

”There is a limit, in terms of performance, to the extent to which one can substitute [palladium for platinum]. Then there is the issue of the significant cost that must be incurred in terms of government certification every time there is any change in the chemistry or other fundamental areas in the design of a catalytic converter.”

A further major consideration, says Boyd, is that ”any significant switching by a large motor manufacturer or manufacturers could result in an escalation in the palladium price with an offsetting reduction in the platinum [price]”.

He argues that as developed nations tighten their emissions targets and developing nations, such as China and India, begin instituting their own emissions regulations, the autocatalyst sector will grow. He says the use of catalytic converters in industrial machinery and equipment such as lawn­mow­ers will also increase demand.



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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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