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Posts tagged ‘ruthenium’

Precious, practical and fickle

November 13th, 2013

Platinum’s supply shortage won’t boost its near-term price, a report cautions

by Greg Klein

Forecasts that platinum prices would break free of gold have so far proved premature. True, the metal now attracts strong ETF interest in addition to industrial uses, not to mention jewelry and bullion. Demand is set to hit record levels this year, pushing supply further into deficit. But a comprehensive study of the metal’s 2013 performance finds it “increasingly unresponsive to supply-side concerns.”

Indeed, “after rising above $1,700 in February, platinum was dragged below $1,400 following a sharp fall in the gold price.” That comes from the Platinum 2013 Interim Review released November 12 by Johnson Matthey, self-described as “the world’s leading authority on platinum group metals.” The 40-page report compiled by an 11-person research team tracks the year’s PGM performance in supply, demand and price by jurisdiction and use. While the study finds considerable push and pull from other forces, the vagaries that trouble gold seem to afflict platinum too.

Yet this year’s supply deficit is forecast at 605,000 ounces, compared to 340,000 ounces in 2012, thanks to ETFs and industry. The latter includes automotive catalytic converters as well as chemical, electrical, glass, petroleum and medical/biomedical uses.

Platinum’s supply shortage won’t boost its near-term price, a report cautions

The researchers say an 11.5% increase in industrial demand will come largely from chemical uses while catalyst demand will drop. As for ETFs, “unprecedented offtake” in South Africa, along with ETFs from other regions as well as bars and coins, “will lift investment demand to a record 765,000 ounces.”

Most of that came from “pent-up demand” in SA where the new Absa Capital ETF rose to 660,000 ounces between its April launch and the end of September, Johnson Matthey points out. The rand-denominated, Johannesburg-traded product attracted institutions that face limits on foreign investments, but also anyone who could afford the 1/100th-ounce minimum purchase.

Along with supply concerns, that ETF partly offset the precious metals plunge that started in April. But by the end of September, the report indicates, platinum’s performance often mimicked gold’s rise and fall in response to speculations about the Fed, quantitative easing and the U.S. debt ceiling. The study tracks platinum’s progress to a September 27 low of $1,411. Still, that’s an improvement over $1,323 in June following the spring precious metals crash that coincided with a weakening auto sector in Europe. Platinum began November 13 at $1,436.

The anticipated breakout from gold hasn’t happened. Even so the year’s platinum mine supply forecast comes to 5.74 million ounces (up 1.6% from 2012), plus 2.07 million ounces from recycling, versus 8.42 million ounces of demand (up 4.9%). Commodity price explanations don’t come easily, especially with precious metals. And platinum is considered both precious and industrial, potentially pulled in different directions by opposite forces. Johnson Matthey attributes about 9% of 2013 demand to investment and 32% to jewelry.

Looking ahead, the report sees a third consecutive deficit next year but “this may not be sufficient to support higher platinum prices.” The predicament of South Africa, the world’s leading producer but with dwindling reserves and uncertain labour conditions, might have been expected to push platinum prices further. “But investor fatigue appears to have set in and sporadic strikes in 2013 have had increasingly little influence on the price.”

[A not-yet launched Johannesburg-traded ETF comprises] the biggest uncertainty facing the palladium market next year.—Johnson Matthey’s
Platinum 2013 Interim Review

The report sees palladium ($741 an ounce on November 13) showing a smaller but still significant 2013 deficit of 740,000 ounces. The metal’s mined for catalysts, largely for gas engines, as opposed to diesel motor catalysts that use platinum. Other key consumers are the chemical, dental and electrical industries.

The mine supply forecast shows 6.43 million ounces, down about 1.5% from last year. Recycling brings in another 2.46 million. Demand comes to 9.63 million, down 3.4%. About 7.8% of demand comes from investment and 4% from jewelry.

Both industrial and investor demand have dropped despite “significant inflows into palladium ETFs in the first two months.” But the authors note that Absa Capital has received SA regulatory approval for a Johannesburg-traded palladium ETF, a “wild card” that’s “the biggest uncertainty facing the palladium market next year.” The ETF’s launch date hasn’t been announced.

Rhodium, also used for catalysts and in the chemical, electrical and glass industries, began November 13 at $980. That’s barely above July’s nine-year low of $975, despite demand reaching a six-year high. The report attributes the contradiction to a “large hangover of surplus metal that accumulated between 2008 and 2011.” Today’s small deficits are “entirely due to the movement of market stocks into physically-backed investment products” from a Deutsche Bank rhodium ETF as well as rhodium bars sold in North America and Europe.

Prices for ruthenium and iridium, both used for electrical, chemical and (of course) electro-chemical uses, dropped sharply this year. The report attributes “a long-term imbalance between primary production and consumer offtake.”

Examining supply by jurisdiction, South Africa shows little change in platinum production, a result of depleting deposits and labour unrest. Only Zimbabwe, a country fraught with jurisdictional risk, is likely to increase its platinum output in 2014.

Russia’s platinum production will see a slight decline. Palladium too, because of reduced sales from government stockpiles, “now an insignificant part of the overall palladium supply picture.”

Nor will Canadian production see much change. Lower output from North American Palladium’s TSX:PDL Lac des Iles mine in northwestern Ontario will be offset by increased palladium byproduct from nickel operations at Glencore Xstrata’s Raglan mine in northern Quebec and Vale’s Sudbury operations, the report states.

South of Klondike

May 28th, 2012

Prophecy adds PGEs to its Yukon Nickel-Copper-Gold Project

By Greg Klein

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Long after the Gold Rush that such inspired characters as Sam McGee, Blasphemous Bill and Dangerous Dan McGrew, Yukon is again coming to international prominence as a new gold play matures. In the territory’s southwest, Prophecy Platinum Corp TSXV:NKL is developing one of the world’s largest undeveloped resources of nickel-copper-platinum group elements towards PEA and prefeasibility.

Unlike Russia and South Africa, producers of 85% of world PGE supply, Robert Service’s old stomping ground has settled into a stable, mining-friendly jurisdiction. That bodes well for Prophecy‘s Wellgreen Project and its newly found potential to host a rare PGE resource in addition to nickel, copper and gold.

Prophecy adds PGEs to its Yukon Nickel-Copper-Gold Project

The company has just released 90 additional assays from a 2011 hole which show an average 28% increase in the full spectrum of six PGEs. Results from the hole released September 26, 2011, reported nickel-copper-gold assays in addition to platinum-palladium, but didn’t include results for the other four PGEs. The September assays showed

0.29% nickel, 0.18% copper, 0.34 g/t platinum, 0.33 g/t palladium and 0.05 g/t gold over 457.4 metres
(including 0.36% nickel, 0.3% copper, 0.63 g/t platinum, 0.54 g/t palladium and 0.08 g/t gold over 120.9 metres)
(and including 1.03% nickel, 0.75% copper, 1.33 g/t platinum, 1.64 g/t palladium and 0.17 g/t gold over 17.8 metres)

The hole started 7.1 metres from surface, extending to 263.8 metres. Ninety sample assays from the same hole released May 25 included the missing PGE quartet. Highlights include

0.023 g/t osmium, 0.019 g/t iridium, 0.054 g/t ruthenium and 0.024 g/t rhodium
0.022 g/t osmium, 0.013 g/t iridium, 0.038 g/t ruthenium and 0.018 g/t rhodium
0.023 g/t osmium, 0.021 g/t iridium, 0.055 g/t ruthenium and 0.025 g/t rhodium
0.05 g/t osmium, 0.03 g/t iridium, 0.078 g/t ruthenium and 0.035 g/t rhodium
0.018 g/t osmium, 0.016 g/t iridium, 0.042 g/t ruthenium and 0.02 g/t rhodium

Rhodium, platinum and palladium are the most important of the six PGEs, with some 80% to 85% going into auto-catalyst manufacture. Prophecy cites a 1997 Geological Survey of Canada bulletin stating that only Russia’s Norilsk ores have nickel-copper cores with comparable values of rhodium. As Prophecy Head Geologist Danniel Oosterman says, “A lot of nickel-copper-PGE deposits around the world don’t have appreciable values of PGEs beyond platinum and palladium.”

Assays are pending for an additional 260 samples from the same hole. Meanwhile, drilling continues. About 30% of a 9,000-metre underground program has been completed so far, with results to come. Surface drilling will resume within the next two weeks, with 7,000 metres planned. The plan is to upgrade the July 2011 resource.

As it stands now, the indicated category shows 220 million pounds nickel, 200 million pounds copper, 15.8 million pounds cobalt, 460,000 ounces platinum, 340,000 ounces palladium and 240,000 ounces gold. The inferred category shows 2.4 billion pounds nickel, 2.2 billion pounds copper, 191.3 million pounds cobalt, 4.9 million ounces platinum, 3.9 million ounces palladium and 2.1 million ounces gold. The estimate uses a 0.4% nickel-equivalent cutoff.

Prophecy‘s timeline calls for a preliminary economic assessment for possible release as early as June and a resource update in 1Q 2013, to be followed by prefeasibility.

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