Total supply for all three PGM’s has been on the rise since the mid-1980s due largely to increases in South African mine production. Increasing mine supply continued until 2006 after which there was a decline in mine production in 2007 by approximately 100,000 ounces. As European and other governments began phasing in emission standards, South African producers were increasing their capacity to meet demand. PGM bearing auto catalysts continue to be the only economically viable material to meet these increasingly stringent standards, and they are known in the auto industry as the “best available technology”.
Mine Production
Unlike gold and silver markets, PGMs are mined in a few select countries, primarily South Africa and Russia, and by a limited number of producers. North America and Europe are also contributors – in Canada most PGMs are mined as a byproduct of nickel and copper with the exception of North American Palladium’s Lac des Iles Mine which has been in operation since 1993 both as an open pit and underground miine operation.
Russian Exports
Russia is the largest producer of palladium in the world and the second largest platinum producer. Almost all its PGMs are produced by Norilsk Nickel which also produces large amounts of copper, nickel, cobalt and other commodities. Until the mid-2000’s, actual output levels were state secrets. New government regulations now allow Norilsk and other domestic PGM producers to release information on production, reserves, inventories and other data. This has allowed for greater transparency and reliability of estimates.
Secondary Recovery
Recovery of PGMs from secondary sources such as old and spent auto catalysts, electronics, dental applications, coins and jewelry have increased significantly as the commodity prices strengthen. For the past two decades secondary supply has been on the rise, in tandem with fabrication demand. Since scrap doesn’t return to the market in the same year it was used, depending upon the life of the product, a strong correlation exists between the amount of PGMs recovered each year from scrap and the time-lagged level of industrial demand. (CPM Group 10-year projections) Estimating the supply of metal from a variety of sources is a complex exercise.
| Palladium Supply (million ozs) |
Palladium Supply by Region
Total in 2007: 8.5 million ozs |
| |
|
| Mine production |
3.9 |
| Secondary supply |
1.6 |
| Russia |
3.0 |
| Total 2007 |
8.5 |
|
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