- One industry expert projects that the price of palladium could double within the next decade.
- The projected increase in palladium prices bodes well for PLG.
- To further strengthen its strategic position, PLG has been exploring opportunities to enhance its processing capabilities.
The palladium market may be poised for a transformation over the next decade, with one industry analyst forecasting a price increase. The anticipated higher price would present a promising opportunity for companies deeply invested in palladium, such as Platinum Group Metals (NYSE American: PLG) (TSX: PTM). As an emerging player in the palladium sector, Platinum Group Metals stands to benefit from favorable market dynamics, potentially enhancing its strategic positioning.
In a recent analysis, Gaius King, a seasoned industry expert, projected that the price of palladium could double within the next 10 years (https://ibn.fm/VrkbT). King attributes this optimistic forecast to several critical factors influencing both supply and demand dynamics. He emphasizes the persistent supply constraints, noting that “palladium supply is inelastic due to the metal being a byproduct of nickel and platinum mining.” This inelasticity implies that even as demand rises, increasing the supply of palladium remains challenging, thereby exerting upward pressure on prices.
On the demand side, King highlights the robust consumption of palladium in the automotive industry, particularly in the manufacturing of catalytic converters for gasoline-powered vehicles. He points out that “stringent emission regulations worldwide are compelling automakers to use more palladium to meet environmental standards.” This regulatory landscape necessitates the incorporation of higher quantities of palladium in catalytic converters to effectively reduce harmful emissions, thereby bolstering demand.
Furthermore, King discusses the limited potential for substitution as a factor sustaining palladium’s demand. While platinum can technically replace palladium in catalytic converters, he notes that “the substitution is not straightforward due to technical challenges and the current price disparity between the two metals.” This complexity in substitution ensures that palladium will remain the preferred choice for manufacturers, maintaining its demand trajectory.
King also addresses the geopolitical risks associated with palladium production, particularly considering that a significant portion of the global supply originates from Russia. He observes that “geopolitical tensions and operational challenges in these regions can disrupt supply chains,” which could further constrain supply and contribute to price volatility. These geopolitical factors underscore the vulnerability of the palladium supply chain, potentially leading to supply shocks that drive prices higher.
An increase in palladium prices would bode well for Platinum Group Metals, which has been actively advancing its strategic initiatives to capitalize on the favorable market conditions (https://ibn.fm/iAttO). Central to PLG’s operations is the Waterberg Project, located on the Northern Limb of South Africa’s Bushveld Complex. This project is envisioned as a large-scale, fully mechanized, shallow, decline-access platinum, palladium, rhodium and gold mine. Notably, the Waterberg Project is projected to be one of the largest and lowest-cost underground platinum group metal (“PGM”) mines globally, positioning PLG advantageously in the market.
In September 2024, PLG announced positive results from an Independent Definitive Feasibility Study Update (“2024 DFS”) for the Waterberg Project (https://ibn.fm/2ANg9). The study confirmed the project’s robust economic and technical viability, reinforcing its potential to become a significant source of four important elements (“4E”) – platinum, palladium, rhodium and gold. The 2024 DFS highlighted increased mineral resources, with measured and indicated resources rising by 9.5% to 33.76 million 4E ounces, and inferred resources increasing by 6.6% to 8.52 million 4E ounces. These findings underscore the project’s capacity to meet the growing demand for palladium in coming years.
To further strengthen its strategic position, PLG has been exploring opportunities to enhance its processing capabilities. In December 2023, the company entered into a Cooperation Agreement with Ajlan & Bros. Mining and Metals Co. to study the establishment of a standalone PGM smelter and base metals refinery in Saudi Arabia. This initiative aims to provide an alternative processing route for the Waterberg Project’s output, potentially enhancing the company’s operational flexibility and market reach. The proposed facility would process PGM concentrate from the Waterberg Project, offering a strategic solution to potential bottlenecks in the existing smelting infrastructure. Exporting PGM concentrate from South Africa to Saudi Arabia would require an approval from the government of South Africa.
In summary, the projected increase in palladium prices over the next decade presents a significant opportunity for companies such as Platinum Group Metals. With its strategic assets, proactive initiatives and robust financial planning, PLG is well-equipped to benefit from the favorable market dynamics, potentially delivering enhanced value to its stakeholders.
For more information, visit www.PlatinumGroupMetals.net.
NOTE TO INVESTORS: The latest news and updates relating to PLG are available in the company’s newsroom at https://ibn.fm/PLG
1 345.03 million tonnes at an average grade of 3.04 4E g/t, and 0.09% Cu and 0.18% Ni.
2 89.70 million tonnes at an average grade of 2.96 4E g/t, and 0.08% Cu, and 0.15% Ni.
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