Platinum mining a guessing game for investors

Once a rising star in the mining sector, platinum has experienced dark days following a strike and a glut in global supply. The platinum sector has been troubled by prolonged strikes that in 2012 culminated in34 protesters dying at the hands of police at Marikana and this year, a protracted five-month strike that may have resulted in fewer deaths but larger financial losses.

But while multinational resources company Anglo American – once the biggest believer in the metal – moves to dispose of its Rustenburg assets, others are placing their bets on a bright future for the precious metal.

The industry thought demand would grow in response to new emissions regulations. But automakers have so far managed to meet these standards by using the same amount of metal, if not less, and also found substitutes such as palladium.

Meanwhile, however, miners are forecasting increased demand for the metal.

“Platinum is strategic in the long-term,” chief investment officer Daniel Matjila is quoted as saying in a Bloomberg report. “We want to hang in there … It should bounce back at some point. We are a long-term player.”

There is a lot of uncertainty both on the positive and on the negative side of supply and investing in the sector entails a lot of risk, said Kavanagh, but “if things move in your favour you will do extremely well”.