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South Africa Poised to Exploit Growing Demand for Platinum Group Metals

FILE - A miner walks past the entrance of the Sibanye-Stillwater platinum mine in Marikana, South Africa, on May 15, 2020.
FILE - A miner walks past the entrance of the Sibanye-Stillwater platinum mine in Marikana, South Africa, on May 15, 2020.

South African President Cyril Ramaphosa said the country is poised to take advantage of the growing demand for platinum group metals, as Western sanctions against Russia over its invasion of Ukraine have forced mining investors to look to Africa.

Ramaphosa’s comments came this week at the Investing in African Mining Conference in Cape Town.

Mining analyst Peter Major said while it’s unfortunate to say, the war in Ukraine is helping South Africa’s economy.

“We produce half of the world’s palladium and we produce 75% of the world’s platinum and we produce about 90% of the world’s rhodium,” Major said. “Because the world is restricting the platinum and palladium they get from Russia, it’s squeezing the price up so we’re in a great position.”

South Africa is also a major coal producer, and Major notes coal prices are on the rise.

“We were lucky to get $100 a ton for our coal, now we’re getting $300 a ton,” he said. “And we’re only exporting coal as much as we did in 1994 because our infrastructure is so bad. But at least we’re getting three times the price than we would’ve been getting.”

Henk Langenhoven, chief economist for the Minerals Council that represents South African mines, said the sharp rise in oil prices will likely move some countries toward green energy more quickly. This, he said, will further drive up demand for platinum and palladium used in the manufacture of zero-carbon emitting power plants.

He also downplayed South Africa’s poor ranking in the 2021 Fraser Institute’s Index, where the country was ranked as one of the 10 worst mining investment nations in the world.

“It doesn't reflect what we see financially,” he said. “Financially the companies are doing very well because of the commodities windfall."

Langehoven added that to properly take advantage of the mining opportunities, southern African countries need better transportation networks. But, he said, there has been progress particularly between Botswana, Namibia, Zambia, Zimbabwe and the Congo.

“There’s a lot of work and investment going on to be able to come south or to come through the west coast through Namibia or Dar es Salam,” Langehoven said. “So, a lot of that infrastructure is starting to be put in place and having an impact. You see quite dramatic shifts in volumes of tonnage going, for example, to Windhoek.”

He said Ramaphosa's speech at the mining conference demonstrated the South African government’s commitment to fixing similar problems.

“One is electricity of course, that we’re not going to solve it immediately. We’re trying to augment as fast as we can,” Langehoven said. “The other one is transport; the rail and harbor systems. The third issue is trying to streamline and simplify the policy issues to get implementation faster.”

The presidents of Botswana and Zambia and the prime minister of Democratic Republic of Congo are among those attending the conference, which runs until Thursday. Also attending is Jose Fernandez, the U.S. undersecretary for economic growth, energy and the environment. Fernandez is the highest-ranking U.S. official ever to attend the conference.