JOHANNESBURG (miningweekly.com) – The product basket of Anglo American Platinum contains eight more products then the five platinum group metals (PGMs) with which it is overwhelmingly associated.

Moreover, growing co-product revenue is helping to provide pushback against PGM price volatility.

“We mine and refine 13 products,” Anglo American Platinum marketing and market development executive Hilton Ingram pointed out about the PGM mining and marketing company that is demerging into the standalone Valterra Platinum.

In addition to its five PGMs, the Johannesburg Stock Exchange-listed company’s products basket also contains gold, nickel, copper, chrome concentrate, three sulphates and one rare earth metal.

Gold is at a record high with a bullish outlook in uncertain times, nickel prospects are improving following recent developments that have shown that Indonesia is price sensitive, continuing increases in demand for stainless steel translate into demand for chrome, and there is insufficient copper to meet the demand from the global electrification trend.

These co-products are all helping to provide resilience against PGM price volatility and the commodity price cycle, it was noted at this week's Capital Markets Day, covered by Mining Weekly.

PGMs are, of course, at the heart of the business, accounting for 85% to 95% of revenue over the last five years. While platinum is the largest by volume, changing prices put palladium into the revenue lead in 2019, rhodium then took over that role in 2021, with platinum grabbing back the top revenue position in 2024. Then ruthenium and iridium play big roles in satisfying industrial market demand.

CATALYTIC CONVERTERS, OXYGEN SENSORS, SPARK PLUGS

A breakdown of PGM market demand shows that investment made up around 3% of total demand in 2024, and jewellery 5%.

Various industrial uses attracted 25% of PGM demand, with green hydrogen expected to grow that significantly in time.

However, by far the largest PGM user at present is the automotive sector, where PGMs are used in emission controlling catalytic converters, oxygen sensors and spark plugs.

During this time of unprecedented change in the automotive industry, Ingram said: “I’m going to give you reasons why the mood music around PGMs has changed and why we should be optimistic.”

Automotive demand is a function of the number of vehicles produced, the share of those vehicles that are catalysed, and the PGM loadings per vehicle.

Trends show that global auto demand volumes could beat consensus forecasts, with Ingram outlining how market demand still overwhelmingly favours internal combustion engine (ICE) vehicles.

On top of that, stricter emission standards and stepped-up testing are likely to lead to increased PGM loadings.

While historically, growth in global GDP has been accompanied by rising car sales volumes, today’s consensus forecasts imply that an inflection point has been reached and that the age-old GDP-sales rise relationship will no longer hold.

“We asked the forecasters about the change: Is it because of mobility as a service? No, came the response.

“Is it self-driving vehicles? No, they said. These are still too far off to be affecting the forecast.

“So, what is changing? They attribute it to our changing relationship with cars, due to urbanisation, public transport and affordability. But that view assumes people buy cars purely for the utility of going from A to B and I'm not sure we do.

“If you've grown up poor, you know that cars represent more than just transport. They represent freedom and status.

“Our world is much bigger with a car. You have the freedom to go where you want, when you want. It's also a potent status symbol.

“Drive through the suburbs of Johannesburg today, and you see cars in the driveway that are worth more than the homes they are parked in front of.

“The role of freedom and status hold true. In America, to the cities of Europe, to the informal settlements of Africa and India, I find it hard to believe that people are not going to opt for freedom or status as soon as they can afford it.

“That leaves affordability, right? Here, I say where there is demand, China finds a cost-effective way of filling it,” was Ingram’s comment.

Import duties are restricting China’s international battery electric vehicles (BEVs) volumes, which has resulted in 80% of China's 2024 vehicle exports being ICE vehicles.

If the relationship between GDP and vehicle demand continues to hold, ten-million more cars will be sold in 2030 than currently forecast.

That is one-million ounces more PGM demand, even allowing that a few of them will be BEVs.

This brings the observations to the next factor in the equation – the share of PGM catalysed vehicles.

In the established markets of Northern America, Western Europe, and Japan, the market share of BEVs was 10% and in emerging markets outside China, the BEV share was 3%.

But, as some point out, in China it was 25% of new car sales and growing, but it seems plausible that China's rapid BEV adoption might be an outlier. The growing view is that China's BEV success is unlikely to be replicated elsewhere.

China’s difference is said to stem from its limited historical experience with ICE vehicle ownership and less affinity with ICE vehicles.

China has the capacity to make huge ahead-of-time investments in electricity grid and charging infrastructure. It has high levels of urbanisation and widespread cheap rail networks.

“But even in China, with all of those advantages, pure electric vehicles aren't for everyone,” Ingram has discovered.

“Range anxiety is real. Just look at how plug-in hybrids and extended range vehicles, which both need PGM catalysts, gained market share in recent years as customers looked for longer range and manufacturers cheaper costs.

“Given a choice, customers want the freedom to refuel or recharge. It's no wonder, then, that global BEV penetration forecasts, while still rising, have been revised lower.

“If we compare consensus forecast now through a year ago, the share expected to be BEV by 2030 has come down from 40% to just 33%, which equates to an additional one-million ounces of PGM demand forecast as of 2030.”

Numerous headwinds to BEV growth have been seen, such as the slow rollout of charging infrastructure, high purchase and insurance costs, uncertain resale values, and more recently, political issues such as tariffs and subsidy cuts.

Given this, are BEV forecasts possibly still optimistic?

“We've plotted a straight line through the existing data points and extrapolated that forward to 2030 and it implies a market share of 25%, which accounts for a further one-million-ounce improvement in PGM demand.

“Of course, we're not dismissive of the prospects for BEVs. We just believe that catalysed vehicles will have a greater market share for longer,” Ingram forecast.

The last factor in the equation is the PGM loading in cars that still have catalytic converters.

PGM loadings are a tug-of-war between the automakers desire for technology-driven cost savings versus the need to meet steadily more strict emissions regulations. But just as important, over the last decade or so, has been the accuracy of testing with realistic test cycles and real-world emissions testing.

In the US, there are steadily rising loadings as emission standards have been tight. In Europe, PGM loadings rose when Euro 6 was introduced. In China, after a substantial increase when China 6 was introduced, loadings have fallen.

“Now there are mixed effects in there, as a greater proportion of vehicles have been exported to lower loaded countries and differences in China's cold-start requirements.

“But the thrifting process might have gone too far. China's Ministry of Ecology and Environment has proposed amendments to China 6 emission standards.

“In the weeks since the publication, we've seen some 70 testing stations fined for not adhering to those standards.

“If Chinese loadings rose by just a half a gram per domestically sold light vehicle, a small part of the gap with Europe, that would be an additional 300 000 oz of PGM demand a year, so there are clear reasons across the equation to be more optimistic than consensus in automotive demand,” Ingram outlined.

INDUSTRIAL DEMAND IS BROAD CHURCH

Two in every five ounces of PGMs find their way into markets outside of the automotive industry.

Industrial demand is a broad church. It has a collection of hundreds of other uses, taking account of the diversified qualities of PGMs to drive modern life.

Key uses range from process catalysts required to produce a wide variety of chemicals, to hard drives that underpin the Internet, fiberglass for wind turbines and copper foil for lithium batteries.

The prospects for ongoing PGM demand in existing applications remain good, with key drivers being continued growth, a rising middle class, capital expenditure and technological shifts.

GOLD SUBSTITUTION

But the most exciting developments will surely be in new applications. Large potential is seen in the hydrogen economy, sustainable aviation, e-fuels, carbon neutral feedstocks, AI and cloud computers.

While most PGM industrial uses are price insensitive, new opportunities are likely to come from economics-led PGM innovation.

If PGMs can substitute a mere 11% of the nine-million ounces of gold that go into industrial applications year, PGM demand will be increased by one-million ounces a year.

In a world where climate change and energy efficiencies are the defining challenges, there will always be a need for ingredients that enable reactions to take place at lower temperatures, lower pressures and lower costs.

JEWELLERY MARKETS

Although falling luxury spend in China has put pressure on global jewellery sales, jewellery demand uplift has been seen increasingly in India and North America, with 2024 a seeming turning point in the jewellery sector's fortunes.

With gold now three times as expensive as platinum, the biggest gap since 1900, opportunities are arising to regain market share from white gold, which ironically, was invented as a cheaper alternative to platinum. If platinum can regain as little as 10% of white gold sales, platinum demand will rise by an additional 1.5-million ounces.

FOUR TAKEWAYS

Above-forecast vehicle sales, stronger-for-longer market share of catalysed vehicles, stricter China testing presenting vehicle-loading upside, and industrial and jewellery markets benefiting from the sky-high gold price are trends to watch.