Harare - Zimbabwe's platinum producers are poised to reap significant benefits from the surging global demand for the metal, presenting an opportune time for the country's platinum sector. This advantage is further amplified by the fact that other countries are grappling with various challenges that have led to a reduction in their platinum production. As the demand for platinum continues to rise, it is crucial to examine the current state of affairs within the platinum sector and assess Zimbabwe's potential to capitalize on this upswing.
In 2022, global platinum consumption was estimated at 6,518.3 thousand ounces (koz), and projections indicate a Compound Annual Growth Rate (CAGR) of over 2% during the period from 2023 to 2026. However, the preceding year witnessed relatively low global platinum consumption, primarily attributed to weakened automotive demand caused by supply chain constraints and China's stringent zero-COVID policy. These factors, coupled with reduced investment demand, had a dampening effect. Nonetheless, this decline was partially offset by robust jewelry demand, particularly in China and the United States.
Notably, Zimbabwe's platinum production reached a record-breaking 120,000 ounces in the second quarter of 2023, reflecting a notable 2% increase compared to the second quarter of 2022, according to the World Platinum Investment Council (WPIC) report. This achievement stands in contrast to the global trend, as refined platinum production experienced an 8% year-on-year decline, totaling 1,178 koz. Although gains from Russia and Zimbabwe offered some respite, they were insufficient to offset the declines witnessed in South Africa, a dominant platinum producer.
Zimbabwe solidified its position as the world's third-largest producer of platinum in 2022, underscoring its significance in the global platinum market. Over the five-year period leading up to 2021, Zimbabwe experienced a slight decrease in platinum production, with a Compound Annual Growth Rate (CAGR) of -0.05%. However, a promising shift is expected, as production is projected to rise by a CAGR of 3% between 2022 and 2026. This positive trajectory is exemplified by the second quarter of 2023, where Zimbabwe's platinum supply demonstrated a noteworthy 2% year-on-year increase, reaching 126 thousand ounces (koz). This achievement marked the highest supply level since the fourth quarter of 2021.
The upturn in platinum supply can be attributed to Zimplats, a major player in the Zimbabwean platinum industry. Zimplats experienced higher output due to the commissioning of a concentrator, resulting in increased milled ore volumes. Furthermore, Zimplats' collaboration with Zambia through a power import agreement mitigated the adverse effects of national load shedding, which had impeded production for other platinum producers in the country. Notably, this load shedding issue significantly impacted South Africa, the world's largest producer of platinum.
In the second quarter of 2023, Zimbabwe's platinum output witnessed an impressive 9% surge, rising from 116 koz in the first quarter to 125 koz. Cumulatively, the first six months of 2023 saw a marginal 1% increase in platinum production, reaching 242 koz from 241 koz. However, it is important to note that mining firms may face challenges due to increased load shedding following the election, potentially caused by the government's termination of imports from the Southern African Power Pool. Nevertheless, the outlook remains optimistic, with mine production expected to reach a record high of 502 koz in 2023, representing a 5% year-on-year increase. This growth hinges on the expansion capacity at Zimplats. It is crucial to consider that Zimbabwean-mined platinum undergoes downstream processing in South Africa, and the overall outcome is contingent upon the performance of the South African platinum industry.
Currently, Zimbabwe accounts for 8% of global platinum production, with South Africa dominating the market, contributing 73% of global production. Within Zimbabwe, three major operating platinum mines exist: Zimplats, owned by Impala Platinum; Mimosa Mine, jointly owned by Sibanye Stillwater and Impala Platinum; and Unki Mine, owned by Anglo American. Impala Platinum holds approximately 80% of the platinum market share in Zimbabwe, with the remaining 20% belonging to Anglo American. However, the platinum sector is set to witness the entry of new players, including Vi Holding Group, Landela Mining Venture, Eurasian Resources, TransMineral, Tharisa, and Leto Settlement Trust. These companies are actively developing projects that will contribute to the expansion and diversification of Zimbabwe's platinum industry.
Zimbabwe's platinum sector is making significant strides, positioning itself as a prominent player in the global market. With an anticipated increase in production, strategic collaborations, and the entry of new industry players, Zimbabwe is poised to further strengthen its role in the platinum industry, contributing to its economic growth and enhancing its global standing.
Mining platinum is a complex and costly endeavor, plagued by challenges such as deep underground extraction and labor disputes. However, the significance of platinum projects cannot be understated, as the demand for this precious metal has experienced a remarkable surge in recent years, primarily driven by China and Japan. The growth of the platinum mining market is primarily fueled by the increased demand for platinum group metals (PGMs) in the automotive and jewelry design sectors.
The automobile industry plays a pivotal role in driving the demand for PGMs, as these metals are utilized as autocatalysts to mitigate greenhouse gas emissions. While platinum is primarily used in diesel vehicles, all three metals - platinum, palladium, and rhodium - can be interchanged. The automotive sector accounted for a substantial portion of global platinum consumption in 2022. This was primarily due to the implementation of stringent environmental standards for trucks, predominantly diesel-powered, in China. Consequently, there was a significant increase in platinum loadings per vehicle for trucks in China.
In 2022, jewelry consumption in India rebounded to normalcy after a two-year decline. This resurgence was primarily attributed to increased consumer demand, supported by the promotion of platinum products by jewelry manufacturers. Similarly, in Japan, platinum jewelry consumption witnessed growth in 2022. This was driven by heightened consumer preference for high-purity and asset products, as well as fashion jewelry. In the United States, platinum jewelry sales experienced robust growth in 2022, despite inflation and global supply chain challenges. The surge in sales, particularly in bridal and gemstone fashion jewelry, contributed to this positive trend.
In summary, platinum mining presents formidable challenges, but the increasing demand for platinum, particularly from China and Japan, underscores the importance of platinum projects. The growth in the platinum mining market is primarily fueled by the automotive and jewelry sectors. The automotive industry's reliance on platinum as an autocatalyst and the resurgence of jewelry consumption in various regions contribute to the rising demand. Additionally, the distribution of global PGM reserves highlights the dominance of South Africa in this industry. These factors collectively emphasize the significant role that platinum mining plays in meeting the escalating demand for this precious metal worldwide.
