Although the slowing growth rate in the development of electric vehicles (EVs) in some major markets might negatively affect the demand for platinum-group metals (PGMs), it is important to consider that, inversely, it benefits internal combustion engine (ICE) vehicles and hybrids, which have higher PGM loadings, says Minerals Council South Africa former chief economist Hugo Pienaar.

Loadings, in this sense, refers to the quantity of metal used in an emissions control system of a vehicle.

ICE vehicles will not be phased out as early as initially anticipated, owing to many countries moving their targeted dates from 2030 to 2035, for ramping up the introduction of EVs to reduce greenhouse-gas emissions.

“This trend has been mostly experienced in the UK and a few other European countries,” says Pienaar.

The slowdown of EV roll-out in South Africa can be attributed to the burgeoning costs of the development and construction of charging stations, as well as the capital expenditure required by EV manufacturers to retrofit their facilities and update technologies to suit the development of such vehicles.

Consequently, that will provide some respite for PGMs in South Africa, as there will still be a workable demand for traditional petrol or diesel vehicles, as well as the greater uptake of hybrid vehicles that will use electric and ICE technologies, adds Pienaar.

PGM Membership

Pienaar says South Africa’s PGMs production sector is still significant, accounting for one-third of the country’s total mining output and the fact that Minerals Council South Africa’s biggest membership base comprises PGMs miners.

“This figure is reflective of platinum’s role in the mining sector and is a natural consequence of the sector being dominant in the overall scheme of things,” he says, adding that some of the biggest PGM players are directly involved with the Minerals Council as members.

Further, owing to the Minerals Council’s targeted efforts and its members’ continued support, “great strides have been made” to mitigate challenges – such as increased electricity tariffs implemented by State-owned power utility Eskom, infrastructural deficits and a waning investment portfolio – in the PGMs sector.

“The Minerals Council and other parties were instrumental in lobbying against the initial tariff increase proposed by Eskom and, through these collaborations, were able to contribute to the Nersa-approved increase being significantly lower than what was presented,” he adds.

Pienaar notes that infrastructure-related issues for PGMs at municipal level, including water provision, road infrastructure surrounding mining areas and community unrest sparked by poor service delivery, were also key challenges.

The Trump Card

Although South African PGMs mining companies were relieved when the US’ Donald Trump administration did not impose a 30% tariff duty on critical minerals, and PGMs in particular, Pienaar stresses that “we should still be wary”, as “Washington has subsequently launched a separate investigation into critical mineral imports into the US, the knock-on findings of which could be detrimental to South Africa’s PGMs mining sector.”

Pienaar is, therefore, concerned about the US’ imposition of a 50% tariff on copper.

“While this does not impact on South Africa, one must look at the Chinese economy and the knock-on effects it will have on South African commodities that do go to China.”

He stresses that the “broad story” on tariffs “certainly is a concern” for South Africa from a mining sector perspective, even though the country has not seen specific tariffs on commodities such as PGMs.

In terms of future PGMs demand and consumption, Pienaar highlights that the Minerals Council has been considering the green hydrogen sector for a while, and the extent to which PGMs can be used in such applications and technologies.

“Although this is more a research-driven initiative to unearth future demand of PGMs, it is quite a big focus for the Minerals Council,” he clarifies.

Pienaar concludes that, as one of the founding members of the World Platinum Investment Council, where research is being undertaken from an investment perspective through initiatives such as the sale of platinum coins, engaging people to invest in exchange-traded funds and similar products, Minerals Council South Africa continues to explore future demand for PGMs.