(Reuters) – The platinum market will improve on the back of a growing supply deficit as production declines, Northam Platinum CEO Paul Dunne said on Friday, after the company said its half-year profit halved due to low metal prices.
Prices of platinum group metals (PGM), mostly used to curb emissions from vehicles, have fallen sharply over the past two years amid concerns about growth in electric vehicle (EV) sales.
Northam Platinum on Friday posted headline earnings of 238.24 million rand ($12.89 million) in the six months to end-December, a 49.7% decline from 473.38 million rand from the year earlier period.
Northam’s bigger rivals Anglo American Platinum and Impala Platinum have also recently reported drops in profit of 40% and 43%, respectively. Another PGM producer, Sibanye Stillwater, registered a $311 million loss, its second in successive years.
“In our considered opinion, the longer this market condition persists, the greater the correction will be,” Dunne said during a results presentation.
“This market will turn, and we believe that platinum has a growing supply deficit,” he added.
The white metal, which peaked above $2,000 per ounce in March 2008, is currently trading around $945 per ounce, about 20% off its post-Covid-19 high.
Supply from South Africa, which accounts for 70% of global platinum production, will continue to decline due to ageing mines and a lack of new projects as miners restructure their operations to survive a very challenging price environment, Dunne said.
South Africa’s platinum output has declined to about 3.9 million ounces from a peak of 5.3 million ounces in 2006.
“South Africa will require further destocking in 2025, just to reach 3.8 million ounces,” Dunne said.
Platinum was less exposed to battery electric vehicle (BEV) penetration in China and was benefiting from substituting more expensive palladium in light duty vehicles, Dunne added.
($1 = 18.4883 rand)
(Reporting by Nelson Banya; Editing by Eileen Soreng, Kirsten Donovan)
