Platinum, which accounts for around 40% of our mineral exports, thus being a major contributor to the security of the overall economy, is in jeopardy. As the global economy shifts from carbon fuel sources to “green” energy sources, South Africa's platinum mining industry analysts are split. Some claim the industry faces a steep decline as the electric vehicle (EV) revolution accelerates, while others see an opportunity for new forms of energy storage technologies related to the green energy revolution.

South Africa has long been a uniquely innovative place in the area of catalytic converter technology, largely as a result of the proximity to the mining sector, which has a vested interest in the development of manufacturing clients.

While electric vehicles are threatening the use of the metal in catalytic converters, new technologies are now emerging as power storage becomes a necessity in the wake of exploding world government subsidies into wind and solar energy, whose output is intermittent, and reliant on expensive storage and transmission technologies.

‍

The doomsayers

Paul Dunne, CEO of Northam Platinum, recently sounded the alarm, noting that the once-thriving sector is under siege. The price of platinum, which once soared above $2,000 an ounce, has plunged to $939—marking a 13% drop since last year. This decline, exacerbated by falling demand for catalytic converters in traditional vehicles, spells trouble for an industry that heavily depends on the automotive sector.

Northam Platinum’s fortunes have waned in parallel with these market shifts. The company reported an 81.6% drop in headline earnings per share for the year ending June, down to 4.45 rand ($0.25) from 24.15 rand the previous year. The broader sector has been similarly afflicted, with palladium prices down 40% in 2023 and rhodium trading at a fraction of its 2021 peak.

The South African platinum sector, once a global powerhouse, has been in steady retreat. Output peaked at 5.3 million ounces in 2006 but has since dwindled. Dunne forecasts a further 10% drop in production over the next five years, from the current 3.9 million ounces to around 3.5 million. He expects Northam’s production to stabilize at approximately 1 million ounces annually, a target bolstered by increased output from its Eland mine.

Yet, the outlook remains bleak. The industry is grappling with aging infrastructure, years of underinvestment, and a shift towards battery-powered vehicles that do not require platinum-based catalytic converters. Dunne predicts a further contraction of 500,000 ounces in South African platinum output every five years as investors shy away from funding new mines.

This decline echoes the trajectory of South Africa’s gold mining industry, once the world’s largest, now reduced to 12th place globally. The platinum sector, a major foreign currency earner and employer of over 181,000 workers, is at a crossroads. Impala Platinum CEO Nico Muller recently remarked that the prospect of new mine development in South Africa is "highly improbable" given the current economic pressures. With the world’s deepest mines and costly, labor-intensive operations, the future of South Africa’s platinum industry appears increasingly uncertain.

‍

The soothsayers

On the other hand, there are new opportunities. Whether these will replace the size of the catalytic converter market is anyone's guess, but the window is open for now.

Platinum Group Metals, a dual-listed entity in New York and Toronto, is making strides in South Africa's Waterberg region, where it aims to revolutionize battery technology with palladium and platinum. Traditionally absent from the battery electric vehicle (BEV) market, if the new technologies being developed here make headway, it could change the future of the country's mining sector.

This effort is part of a broader push by South Africa's platinum group metals (PGM) mining industry to explore new markets for these valuable resources. Platinum Group Metals has reiterated its commitment to developing prototypes this year that could lead to commercial applications.

The intensive drive to integrate palladium and platinum into lithium battery technology is spearheaded by Lion Battery Technologies, a venture jointly established by Platinum Group Metals and Anglo American Platinum. Lion's ambitious target is to produce batteries with specific energies 20% to 100% higher than current technologies, all while maintaining or exceeding existing cycle lives.

This potential expansion of demand for platinum and palladium in the battery sector is of strategic importance for South Africa’s PGM industry. Lion, in collaboration with Florida International University, is advancing research into using these metals to enhance lithium-air and lithium-sulphur battery chemistries. The aim is to boost discharge capacities and improve cyclability, making these batteries more viable for widespread use in BEVs.

Additionally, Lion has enlisted the Battery Innovation Center in Indiana to accelerate the commercialisation of its next-generation platinum- and palladium-based battery chemistries. The center's work involves conducting independent trials to validate Lion's proprietary electrode compositions in both lithium-sulphur and lithium-ion cells. The research holds promise, with early indications suggesting that these PGM-based catalysts could offer a swift solution to many current battery limitations.

In a recent presentation, Dr. Bilal El-Zahab, Lion’s lead researcher, confidently stated that the energy density of batteries could indeed be increased, a development that would deliver significant additional kilowatt-hours per kilogram.

Meanwhile, Platinum Group Metals remains focused on its flagship Waterberg project, situated in the Bushveld Complex's northern limb. The project is designed as a mechanised, shallow mine extracting palladium, platinum, gold, and rhodium. The company is advancing towards a development and construction decision, with a recently approved $1.35-million budget for stage-four work programmes, a part of a larger two-year, $21-million pre-construction plan.

In parallel, a cooperation agreement has been established with Ajlan & Bros Mining and Metals to explore the creation of a standalone PGM smelter and base metal refinery in Saudi Arabia. This study aims to diversify the sources of PGM concentrate, reducing the risk associated with reliance on a single project.

The Japan Organisation for Metals and Energy Security has also thrown its weight behind the Waterberg project by establishing HJ Platinum Metals, a special purpose company to hold and fund their future equity interests in the venture.

Despite reporting a narrowed net loss of $2.37 million in the six months to February, Platinum Group Metals remains optimistic, continuing to engage closely with local communities to ensure the Waterberg project delivers value for all stakeholders.

‍