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South African Platinum Faces Imminent Crisis

The South African platinum sector…

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South Africa’s Platinum Production Halted By Unions

Unrest in South Africa’s platinum…

Platinum - Gold’s big brother Uncovered!

Whilst Gold is busy grabbing the headlines, it’s bigger, rarer, more versatile and useful brother is quietly doing its job of providing Industry and manufacturing with the base elements they need to help run our world. Most people just know platinum for its expense or it’s appearance in jewellers windows, but this incredible metal is much more than that!

So what exactly is platinum?


Platinum is a precious metal, which basically means it’s rare, expensive and composed of metallic elements that are scarce.
It’s a silvery white metallic colour (somewhere in between silver and Nickel) It’s a very dense metal with an atomic weight of 195.23, making it almost as heavy as gold. It’s malleable, lustrous and ductile and is used in many industries from Jewellery to making refrigerators and car parts.
In fact over 20% of manufactured items use platinum at some point in the manufacturing process (the production of catalytic converters consumes over a third of platinum produced on a yearly basis.)

Rarity of platinum

Platinum is very rare as It’s difficult and expensive to locate and mine, in fact it’s the rarest of all the precious metals, with an annual production of about seven million ounces. This is less than a tenth of annual gold production which is currently over 80 million ounces.

Over 90% of global platinum supply comes from South Africa (80%) and Russia who have been cutting back their production targets at a time when demand is increasing by hundreds of thousands of ounces a year. With reserves and supply limited to two countries this is a danger to production as strikes, political problems or economic issues could lead to a swift reduction in supply which would obviously have a sharp impact on platinum’s price.

Platinum and Industry

As I said above, “platinum is used in over 20% of manufactured goods” and the industrial demand is only increasing as we discover new uses for the metal. Platinum is almost un-corrodible, it’s malleable, it has high electrical conductivity and it’s very durable.
It’s used in the production of: Chemicals, fertilizers, computers, gasoline, glass, wires, paints, medicines, cars, explosives & planes.
There are very few substitutes for platinum so demand will not be dropping anytime soon.
Apart from the production process you will also find platinum in a great number of items. A few of these are: jewellery, Spark plugs, fibre optic cables, fuel cells, hard disc drives  and of course catalytic converters, as it has high catalytic properties (Demand for catalytic converters could be over 3.3 million ounces by 2010.)

Platinum Jewelry

Platinum’s lovely silver blue colour has meant it’s been in great demand in the jewelry business since the 18th century. Jewellery production accounts for over 25% of yearly global platinum production, but has seen a large drop from 2000 when it accounted for over 50%. This is partly due to its high platinum prices and the popularity of substitutes (silver & Gold)
Apart from its colour, it’s also desired by jewelry manufactures for its hardness and strength, its flexibility and also the fact that it’s resistant to corrosion (doesn’t tarnish or oxidise when exposed to air or water)
Another often overlooked benefit of platinum jewelry is that it’s hypoallergenic, so it’s a great choice for people who have reactions to other metals or 14k gold.

Platinum as an investment

The commodity bull market has led to an increase in the prices of all precious metals. Apart from its use in the manufacturing sectors platinum is also seen as a store of value and hence a hedge against the dollar and other paper assets. Over the last few years this has led to a significant increase in investment from Private investors, mutual funds, pension funds and Companies. For example, in 2007 Novartis, the Swiss Pharmaceutical giant announced that they would be investing $11.37 billion in Platinum and other precious metals.

Platinum Exchange traded funds were introduced in London and Zurich in 2008, which have proved very popular amongst investors. A similar US ETF was planned, but is unlikely to happen as platinum companies were concerned this would lead to demand outstripping supply and result in a considerable price jump.

Platinum retail investment products have also been very popular over the last few years as the banking crisis showed the flaws in our financial system and it’s got to the point where it’s difficult to locate dealers with supplies of platinum coins that aren’t charging an extortionate premium over the spot price.

Platinum Mining

Mining for platinum is very capital intensive as it takes up to 10 tons of platinum ore to produce one ounce of pure platinum. Platinum ore deposits are very scarce and highly scattered. It usually occurs with five other metals which are also rare, expensive and chemically classified as noble metals. These are: Iridium, Osmium, Palladium, Rhodium & Ruthenium, it’s also found as compounds with arsenic and sulphur.
Over half of the world’s historic production of platinum has come from one site in South Africa and the platinum has come from a thin layer of rock little more than 3ft thick.

So as you can see Platinum is beautiful, versatile, useful, rare and valuable. With world demand steadily increasing and no new reserves being found this is one precious metal that should hold its ground in the future.

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