We didn’t see it coming” are not the words investors typically want to hear. But it was a refreshingly honest take from Northam Platinum CEO Paul Dunne, when asked about the decline in platinum group metal (PGM) prices that led to his company calling off its 18-month pursuit of Royal Bafokeng Platinum (RBPlat).
Tearing up the tarmac one day, wheel-less the next. So often that’s the story of commodities. But in PGMs — a niche, yet critically important family of metals that supply the global car industry — the past three years have been quite the ride. To be clear, Dunne’s dismay wasn’t about a market correction. That much was anticipated — rather, it was the speed and extent of that correction.
Nor was Dunne alone in his surprise. Impala Platinum (Implats) CEO Nico Muller, who successfully duelled with Dunne for control of RBPlat, also confesses to being blindsided by the plunge in PGM prices. The story of rhodium encapsulates the rollercoaster ride. At last count, it was trading about $3,500 an ounce. Yet it was less than three years ago, in 2020, that it hit $30,000 an ounce, transforming the fortunes of its miners.
Between 2021 and 2022, income from rhodium sales contributed half of the industry’s profits, despite comprising only 7% of total PGM output. Palladium, another PGM, was also on a tear, tripling in value from 2020 to mid-2022.
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