Palladium surge, a boon for Zimplats

  • Palladium prices rise 25%
  • Palladium demand may ease, shifting demand to platinum
  • Zimbabwe is the world’s third largest platinum producer

Harare – Palladium has soared over the past two weeks, notching 25% to settle at above $2500 an ounce driven by high demand from car makers.

Car makers use the precious metal to cleanse vehicle emissions by removing noxious gases from vehicle exhausts.

At its current price, palladium is almost double to where it was same period last year. According to Goldman, palladium may surge to test $3000 an ounce but warned that such peaks do not last for long as the record levels will cut into demand.

Worldwide shortages and high prices could force car manufacturers to switch to platinum, a preferred metal for diesel engines. Platinum is usually described as palladium’s twin.

However, auto producers are likely to switch to platinum only when palladium shortages become severe enough to create problems in producing a car. Ore bodies are becoming deeper and too expensive to mine and in South Africa, load shedding means deeper mines cannot be worked safely.

Both palladium and platinum are often found in the same ore bodies and are sourced largely from South Africa and Russia.

Zimbabwe, after South Africa, has the world’s second biggest platinum deposits on the Great Dyke. An estimate of 2.8 billion tones PGM ore at 4g/t 4e is estimated to lounge on the Dyke. Grade and thickness of ore body persist over large areas.

The country’s platinum producers include Zimplats, Mimosa and Unki which are all head-quartered in South Africa.

Palladium became the top revenue driver for Zimplats, Zimbabwe’s top producer, in 2019 overtaking platinum with production coming in at 223 000 ounces, earning the company US$264,3 million.

The mineral’s contribution to total revenue has since risen to 42% from 27%, five years ago owing to a massive 213% price surge.

If the 25% increase in prices is maintained throughout 2020, palladium’s revenue share may increase significantly, holding production and other factors constant.

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