Sibanye makes another bold call on platinum price

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That forecast comes as demand for platinum-group metals has already rebounded to pre-pandemic levels, Sibanye Stillwater CEO Neal Froneman said in an interview from his farm in South Africa’s Limpopo province.

Platinum has almost doubled from an 18-year low in March amid supply disruptions and a revival in China’s auto industry, which uses the metal in pollution-control devices.

“Platinum has only just started to re-rate and it will continue,” Froneman said. “There is no reason why platinum will not eventually trade at $2,000 an ounce and probably even higher.”

It’s not Froneman’s first bold call. When the South African dealmaker acquired Stillwater Mining Co. four years ago, critics lined up to say he had overpaid for the US palladium producer. Since then, the price of palladium has almost quadrupled, allowing Sibanye to resume dividends and repay debt.

Platinum will be supported by its increasing use in hydrogen fuel cells, while automakers in China and North America are starting to switch the metal in for more expensive palladium in autocatalysts, Froneman said. New technology developed by BASF SE — with backing from Sibanye and Impala Platinum Holdings — to partially replace palladium in autocatalysts could boost platinum demand by at least 300 000 oz/y, he said.

“Substitution has taken off very well in China and the regulatory environment there is a lot more flexible,” Froneman said.

Froneman isn’t alone in his optimism for platinum. The metal could trade at around $1 500/oz in 2022, according to Georgette Boele, a senior precious metals strategist at ABN Amro Bank. The metal traded just above $1 100/oz on Thursday.

“Slowly but surely the stars are aligning for this precious metal,” Boele said in a note on January 6.

As for rhodium, the world’s priciest precious metal that climbed to a record on Thursday, its rally could continue, according to Froneman. There’s still a “substantial” shortfall, said the CEO of Sibanye, which is the biggest rhodium supplier.

“There is no reason for rhodium and palladium prices to come back and there is every reason for the platinum price to increase,” he said.