South Africa to lead global PGM supply rebound next year after dragged output

Tawanda Karombo

Lower production from platinum group metals mines in South Africa muzzled global PGM supply in the third quarter although gains from the world’s biggest producers of the metal, including Zimbabwe where Valterra, Impala Platinum and Sibanye-Stillwater operate, are expected to lift up supply by 2% next year.

The World Platinum Investment Council said on Wednesday that global PGM supply was flat in the third quarter year on year “weighed on by lower South African mine” production. 

This was after refined volumes from Valterra (formerly Anglo American Platinum) fell in South Africa.

This was reflective of “a significant destocking of semi-finished inventory in Q3’24.

Implats’ own refined production was however, little changed year-on-year, although scheduled processing maintenance led to a further build in already elevated work-in-progress stocks.

“South African production contracted 2% year-on-year to 1 028 koz,” said WIPC in a quarterly report.

Nonetheless, following the unusually high rainfall and flooding that disrupted South African mining operations earlier this year, as well as the processing constraints that curtailed refined volumes, PGM supply is expected to recover over the latter half of the year.

“The completion of maintenance at Implats’ South African smelters should allow some destocking of excess inventory that had been deferred earlier in the year, partly due to disruptions to water, power and hydrogen supply to the refineries,” further noted WIPC.

Although South African mine production is forecast to contract 5% to 3 945 koz, mine supply for PGM from the country is projected to rise by 2% year-on-year in 2026, with gains from South Africa and Zimbabwe partially offset by a modest decline from North America and Russia.

Output from major South African producers is expected to rise, with improved processing availability anticipated to support a modest increase in output from Implats, aided by the drawdown of excess semi-finished inventory.

Investor sentiment in South African platinum miners and future pricing prospects has brightened with the commodity’s recent good run in prices providing favourable momentum among fund managers.

Long dogged by suppressed investor sentiment due to low prices and uncertainty that demand could be subdued due to popularity and uptake of electric vehicles, platinum group metals have been on a rebound in the past few weeks.

This is despite the World Platinum Investment Council saying earlier this year that full year output will still be 6% lower than last year “since South African producers will not benefit from the large drawdown of work-in-process inventory that occurred” last year.

Besides the inclination towards platinum, the South African fund managers have exhibited “low positioning” in healthcare, offshore, telecom and cash. The biggest falls were recorded for heavy industrials and cash, according to Bank of America analysts.

Zimbabwean PGM production slipped 10% to 119 koz, largely reflecting significant destocking of semi-processed material at Unki, owned by Valterra.

Output from Zimplats, Zimbabwe’s largest producer, edged lower owing to furnace repairs.

Thus PGM supply from Zimbabwe is expected to contract by 4% year-on-year to 493 koz, retreating from the record level achieved in 2024.

“The decline primarily reflects the absence of a drawdown of semi-finished stock that boosted last year’s volumes,” said WIPC.

BUSINESS REPORT