Platinum supply to increase by 17% in 2021

 Jewellery recycling volumes to grow by 16% in 2021 

2021 outlook is with the accordance with World Platinum Investment Council (WPIC), that a focus on demand & supply both. Here is the announced 2021 Platinum Supply outlook by WPIC. According to the recent WPIC report, in 2021 total supply is forecast to increase by 17% (+1,127 koz) year-on-year to 7,865 koz, recovering to 95% of the pre-pandemic level. 

Mine supply is expected to sharply rebound 20% (+976 koz) year-on-year to 5,772 koz following the extreme disruption of 2020. South Africa will account for most of the gains and is forecast to rise 32% (+992 koz) year-on-year to 4,092 koz as output recovers following the processing infrastructure failure and pandemic curtailed operations of 2020. The mine restructuring and shaft closures of the previous few years, a response to the low PGM price environment, have now been fully implemented with the decline in mine capacity expected to stabilise in 2021.

Reserve depletion will necessitate an additional Western Limb shaft closure, but losses will be offset as replacement shafts at the same mine complete their ramp-up. Existing growth projects continue to bring online modest additional volumes. 

However, in response to COVID-19 uncertainty, miners’ reduced risk appetite will see deferred capital spending and delayed project development. 

Additionally, pandemic disruption meant equipment suppliers were unable to deliver key new project equipment items and as a result, volumes from project development will be less than originally planned. 

Given the increased PGM basket prices, the industry continues to assess further growth options with many targeting higher palladium lower platinum ore bodies.

 Feasibility studies for two major Northern Limb projects are expected by the end of 2021. However, unlike previous cycles mining companies are prioritising returning value to shareholders above development capital spend. This means that potential significant new volumes remain several years away. Material risk for South African mine production remains, as the country’s electricity supply crisis has worsened with cumulative load shedding in 2020 exceeding prior years. 

Eskom continues to warn that the electricity supply grid will be unreliable and supply unpredictable for the next year until maintenance programmes are completed in September 2021. Russian output is expected to increase 2% (+10 koz) year-on-year to 682 koz as additional mine capacity is commissioned and a refinery upgrade reaches full capacity. 

North American output is forecast to reach 369 koz, up 5% (+16 koz), as declines in secondary by-product production from nickel mining are more than offset by growth from a primary producer. Output from Zimbabwe is expected to be 2% (-9 koz) down as one mine complex, placed on care and maintenance due to Covid-19, returns to full production and output from a new mine development mostly offsets declines at two mines nearing their end-of-life. 

Global platinum supply from recycling is forecast to grow 8% to 2,093 koz (+151 koz). We forecast auto catalyst recycling to return to growth, with a 6% rise (+87 koz) to 1,573 koz as global logistics gradually return to pre-pandemic status and as economic growth gradually improves, new vehicle sales increase the volume of vehicles that are scrapped. Jewellery recycling volumes in 2021 are forecast to grow by 16%, as a result of fewer restrictions and relatively higher platinum prices, with China accounting for the bulk of gains.