As all resource traders know mineral mining is usually cyclical.How ever the producers of these metals have of late reduced this phenomenon by producing just enough of these metals to satisfy the market and keep prices steady,which is in the interest of both producers and consumers.
The two main producers of PGM's are Russia and South Africa. In the case of palladium Russia carries a huge stockpile of palladium and just releases enough to help pay their balance of payments.Russian economists thought this situation could continue indefinitely. In 2019 there was a slight over production of PGM's and all miners were cutting back on new projects. The Russian political class miscalulated and decided to invade Ukraine thinking the war would be over in a number of weeks.The Ukrainians fought back and now with all the major countries helping Ukraine,the Russians are short of cash to keep the war going and drive their economy forward. They are under increasing sanctions as well. They are selling their considerable stockpile at almost half price as well as their newly mined palladium. China is the main beneficery of this deal as they are investing in fuel cells for transport. Russia is also selling their other PGM's which they had bought at a loss to feed their war.
Unfortunately our mines are suffering the consequences of this policy and at the prices we are now getting for our PGM's most mines are at break even point and some are loss making already.Our mines are closing now unprofitable shafts and putting off new projects to help shore up their reserves of cash. Unless the war stops soon conditions will get considerably worse in the next couple of years leading to massive lay off's of workers.
We expect this situation to right itself , although this might take up to three or more years. As lithium is a rare metal and likely to run out in half a centuary as demand has to increase fourfold if it is to provide all applications now sought for it,the price alone is likely to kill the market ,turning to PGM'S is the only answer.
METAL PRICES SEP 2023, gains and losses.
Platinum over 1year = 14% gain
Platinum over 3 years= 0% gain
Platinum over 5 years= 22%gain
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Palladium over 1 yea =25%gain
Palladium over 3 years=-47%Loss
Palladium over 5 years=-39%Loss
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Gold over 1 Year=61 % Gain
Gold over 3 Years= 1% Gain
Gold over 5 years = 14% Gain
