PGM concentrate must undergo further process before the individual component metals can be extracted. It requires smelting, and then undergoes a leaching process to produce PGM final concentrate. It then is processed in a refinery to extract the individual component metals (namely, platinum, palladium, rhodium, ruthenium, osmium and iridium, as well as gold).
Platinum is predominantly used as a catalyst in the auto sector and in a wide range of jewellery. Together these end uses account for 76% of 2010 total demand for platinum, with automotive catalysts accounting for 49% of 2010 demand. Palladium's dominant end use is in catalysts in the auto sector (62% of demand in 2010), mainly in gasoline-powered on-road vehicles. Palladium's next most significant end use is in electrical components (17% of demand in 2010), specifically in multi-layered ceramic capacitors used as conductive pastes in electrical plating. Dental and jewellery are other important end uses. Rhodium is almost entirely reliant on the automotive sector, with 84% of 2010 total usage in catalysts. A small amount is used in the class, chemicals and electronic industries.
The PGM market
The ore from the Tharisa Mine produces a PGM basket containing platinum, palladium and rhodium of favourable grades. As a result, the Group is ideally positioned to take advantage of the positive projected growth in the demand for PGMs, which are primarily used in the automotive industry and luxury jewellery products.
Demand for PGMs in auto-catalysts is expected increase due to tightening automotive emissions regulations worldwide that require additional PGM catalysts to meet emissions standards. PGMs have the ability to convert exhaust pollutant emissions to harmless compounds, thereby benefiting the environment. Increasingly stringent automotive standards worldwide have resulted in over 85% of all new vehicles sold globally each year being fitted with catalysts containing PGMs. Consequently, PGM demand will specifically benefit from the projected strong growth of the Chinese automotive industry, combined with the sustained use of palladium in diesel catalysts and gasoline vehicle dominance.
SFA Oxford, an independent expert on the PGM sector, estimates that platinum demand will reach approximately 8Moz in 2012, 8.5Moz in 2013 and 9Moz in 2014, while palladium demand is predicted to reach approximately 9Moz in 2012, 8.5Moz in 2013 and 9Moz in 2014. The use of platinum and palladium in jewellery also contributes significantly to PGM demand. Global jewellery demand growth will be driven by Chinese demographics and is forecasted to reach approximately 2.0Moz in 2011 and to exceed 2.0Moz in 2012 and 2013. Rhodium demand, driven largely by emissions legislation requiring more rhodium per vehicle to meet lower mono-nitrogen oxide limits, is expected to reach 1.1Moz in 2012, 1.2Moz in 2013 and 1.3Moz in 2014. Additionally, SFA Oxford expects that there will be supply side constraints within the PGM sector that will result in positive pricing pressure. Global platinum, palladium and rhodium demand is expected to grow by 4.8% per year, on average, from 2011 to 2017, while PGM supply is forecast to grow by an average of 3.1% per year during the same period. Consequently, the Group believes that the supply and demand dynamics for PGMs will remain favourable for the foreseeable future.