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Alt Text

The Precious Metal Heading For A Supply Squeeze

Africa’s mining industry has had…

Is Brazil The Next Big Platinum Frontier?

Mining

South Africa and Brazil might have more to do with each other than most investors believe.

The two countries seem far apart. But take a look at a map like the one below, and something interesting becomes apparent.

(Click to enlarge)

Notice how South America’s Atlantic coast fits very nicely with Africa’s?

Yes, there’s an ocean in between South Africa and Brazil. But if you look closely, you can see evidence that it wasn’t always so — namely, the close fit of the Atlantic coastlines of northern South America and southern Africa.

The two continents fit together nicely because they used to be attached a few hundred million years ago. Yes, they’ve been drifting apart recently — but they share a strong bond when it comes to geology.

Much of South Africa (especially the critical mining areas for gold and platinum) are old — coming from a geological period known as the Archean. A time in Earth’s history prior to 2.5 billion years ago.

The rock underlying Brazil is equally old. With the country actually being anomalous in South America — where most other countries lie atop much, much younger rocks such as the volcanics associated with the Andes mountains.

And the similarity of rocks in both countries is much more than an academic curiosity.

It might just save the platinum industry.

As I’ve discussed many times, platinum is an extremely skewed metal in terms of global production. With South Africa holding a nearly-unprecedented stranglehold in terms of world output — pumping out a full 70 percent of all production in 2016.

That means the big issues coming down the pipe for South African mining — in the form of steep new mining charter — are a major concern for the platinum industry. Representing a legitimate threat to over two-thirds of global supply during the coming years.

It would be natural to expect platinum miners and explorers to diversify in the face of this brewing storm. Except for one thing: platinum is very difficult to find.

Coaxing gold out of Earth’s liquid mantle is hard enough — with most of the world’s geological crust naturally containing almost none of the valuable metal. But platinum is another step tougher, only occurring in primary economic concentrations in perhaps six nations worldwide.

But Brazil may well be one of those.

If we’re looking for a spot that could be a new platinum frontier, Brazil is a good bet. First of all because of rocks the same age as South Africa — and ample evidence of the same “zoned ultramafic complexes” of the type that host major platinum deposits in that country. Related: Will Central Banks Derail The Shale Boom?

And the evidence for big platinum deposits in Brazil is actually much more direct than that.Platinum has in fact been recognized in Brazil (and neighbouring Colombia) going back to colonial times. Numerous Brazilian deposits of iron, vanadium and other metals show associated and anomalous platinum and palladium values.

Major platinum miner Anglo American recognized this fact. And actually explored Brazil — discovering the Pedra Branca platinum deposit, which holds a million ounces of metal at a very decent grade of 2.3 grams per tonne.

That deposit admittedly isn’t huge (Anglo American walked away from it). But it does demonstrate the potential of Brazil — and this is certainly a place with room to run when it comes to exploration.

Perhaps the most tantalizing evidence of Brazil’s platinum upside is the Serra Pelada gold-PGM deposit. A place that saw one of the greatest gold rushes of modern times, after a local farmer found nuggets in his field during the late 1970s, and which ultimately showed platinum and palladium grades as high as 10 grams per tonne. In fact, some high-grade zones of this unique deposit ran into the thousands of grams.

The Serra Pelada gold-platinum project in Para State, Brazil hosted 30,000 local miners in a massive gold rush after its discovery in 1979

All of which suggests great potential here — possibly the best outside of the known deposits of South Africa, Russia, Zimbabwe and the U.S. Watch for more platinum activity across Brazil. It isn’t the easiest place to work, but it does have a long mining history. And it may be one of the few places on the planet capable of filling any coming gaps in global PGM supply.

Here’s to going abroad.

By Dave Forest

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