SHFE Lead to Outperform LME Lead (2016-2-22)

South Africa’s PGM mine supply posted a seemingly robust recovery in the first half of this year. However, the latest assessment from Heraeus Precious Metals warns that this should not be interpreted as the start of a long‑term production growth cycle for South Africa’s PGM sector. According to the production index from Statistics South Africa, domestic PGM mine output rose roughly 12% year‑on‑year in H1 2026. Mine productivity increased by merely around 1.5% over the same period, indicating that the bulk of output growth stemmed from the low base caused by heavy rainfall and floods in H1 2025 rather than structural productivity improvements at mines.

[SMM Flash] South Africa’s electricity system continued to show improved generation reliability through the winter period, according to a September 7 update from the Minerals Council South Africa. Eskom’s average Energy Availability Factor reached 75.6% in July before easing to 71.2% in August, with the decline largely attributed to increased planned maintenance rather than deteriorating generation performance. Electricity demand nevertheless remained weak, with August peak demand of 28,498 MW well below the 34,029 MW recorded in August 2021. For South Africa’s electricity-intensive PGM mines, concentrators and smelters, improved power availability reduces the immediate risk of operating disruptions. However, the Minerals Council said electricity costs for the mining sector increased by approximately 1,185% between 2003 and 2025, underlining continued structural cost pressure despite better supply reliability. Improved generation therefore supports operational stability but does not remove electricity-price pressure on PGM margins.

[SMM Flash] Terra Metals has reported further strong platinum-group-metal mineralisation from the Southwest Discovery at its Dante Project in Western Australia. The company’s September 8 ASX announcement included intersections of 14 m at 3.13 g/t 3E and approximately 80 m at 1.30 g/t 3E, adding to a growing body of drilling that has defined multiple near-surface PGM-copper-nickel sulphide zones at Southwest. The results remain exploration-stage intersections and do not represent reserves or future mine output. However, they strengthen the geological case for a sizeable polymetallic PGM system outside the traditional South African, Russian and Zimbabwean producing regions. Terra Metals is continuing drilling and resource definition work at Southwest, meaning any eventual contribution to global PGM supply will depend on resource conversion, economic studies, permitting and development.