Global PGM Recycling market could potentially rise to US$9 bln by 2018

02 May 2014 Last updated at 08:47:41 GMT

WASHINGTON (Scrap Monster): The value of the global platinum group metals (PGMs) recycling market could potentially rise to US$9bn by 2018 from $6bn last year with an increasing contribution from Asia, according to a market research report by Innovative Research & Products (iRap).

The prospect of increased supply of PGMs from recycling is not good news for SA's strike-pressed miners, who are facing demands for significant wage hikes at a time when the platinum price is depressed. Disruption to mine production may prompt customers to look elsewhere, like recycling, for more reliable sources of supply.

This week, as employers took their increased wage offer directly to employees, bypassing the Association of Mineworkers & Construction Union, levels of violence around Rustenburg are reported to have escalated.

"As mining companies plan mass retrenchments and mine closures over the next year, the risk of vandalism and arson attacks on mine shafts will increase," says Robert Besseling, principal Africa analyst at IHS Country Risk in London, in a note. "Even beyond the May elections and the eventual conclusion of the ongoing strike action, the risk of disruption and damage to platinum mining will be severe."

Since January 23, when the strike at the Rustenburg operations of the world's biggest three platinum miners began, the platinum price has actually fallen. It was $1 411,50/oz on Monday from $1 456,50/oz on January 23, reflecting substantial above-ground stocks held by industry and speculators.

"An end to the 13-week long strike is still not within grasp," says Sonia Hellwig, senior manager of sales and marketing at Heraeus Precious Metals, in the firm's latest market update. "However, it is expected that with a settlement the price will quickly head down. The metal continues to be supported by demand from the automobile industry as well as investment demand in the form of exchange traded funds. The important impulses for further developments will depend on the negotiations in SA."

SA is the biggest miner of platinum and Russia is the biggest miner of palladium. But platinum and palladium can also be recovered from used automobile catalytic converters and electronic parts.

Stamford-based iRap has covered PGM recycling in a new report, "Recycling of Platinum, Palladium and other Platinum Group of Metals: A Global Technology, Industry and Market Analysis". It says in a release the global PGMs recycling market is expected to grow by about 8,2%/year over the next four years because of the increasing value of PGMs and their use in new technologies, like fuel cells.

Growth in recycling from Asia will exceed the average 9,2%/year, iRap predicts. The US market is likely to grow by about 7,5% while Europe will grow at 7,7%.

Courtesy: www.financialmail.co.za

Author: Paul Ploumis