The rise of electric vehicles (EVs) is threatening the demand for platinum, a precious metal mainly used in catalytic converters for internal combustion engines. Platinum miners in South Africa and Zimbabwe, which hold the world’s largest reserves and produce most of the global supply, feel the pressure of lower prices and higher costs.
South Africa is home to the biggest platinum producers, such as Anglo-American Platinum (Amplats), Sibanye-Stillwater and Impala Platinum (Implats). These companies are also big employers in the country and in neighbouring Zimbabwe, where they have large mining operations.
However, the transition to EVs, which do not need catalytic converters, reduces the demand for platinum and its sister metal palladium. According to BloombergNEF, EV sales will top $8.8 trillion by 2030 and $57 trillion by 2050 worldwide. Many auto manufacturers are shifting to EV production, boosting the demand for battery metals such as lithium, which Zimbabwe also has.
The lower demand for platinum and palladium has resulted in weaker prices and lower profits for the miners. Sibanye-Stillwater and Implats have recently announced job cuts in South Africa, affecting thousands of workers. Amplats has also warned of possible layoffs if the situation does not improve.
The Zimbabwean operations of the South African miners are also facing challenges. According to the Chamber of Mines of Zimbabwe, they require about $730 million in capital for 2024 to sustain and expand their production. However, accessing this capital is difficult, as the South African parent companies are tightening their spending amid the commodity downturn.
The Zimbabwean miners are also dealing with an unstable fiscal regime, which has increased the royalties for platinum and palladium by 180% and 150%, respectively. This has raised their production costs and worsened their viability.
The Chamber of Mines of Zimbabwe said that most mining executives in the country are pessimistic about their business prospects in 2024. They cited depressed commodity prices, gloomy investment environment, inadequate foreign exchange and infrastructure bottlenecks as the main challenges.
The future of the platinum mining industry in South Africa and Zimbabwe is uncertain, as the EV revolution is disrupting the traditional market for the metal. However, some experts believe platinum still has a role in the green economy, as it can be used in hydrogen fuel cells and other clean energy technologies. The miners must adapt to the changing demand and find new ways to use their resources.
Source: IOL Africa
