Valterra CEO sees global platinum supply shrinking 15%-20% by decade's end

By Nqobile Dludla

RUSTENBURG South Africa, Sept 19 (Reuters) - Global primary platinum group metal production could fall by as much as 20% by the end of this decade, widening a supply deficit, Valterra Platinum VALJ.J CEO Craig Miller said on Thursday.

Miller said demand from carmakers, who use platinum, palladium and rhodium in catalytic converters, had remained robust, driven by higher sales of both conventional and hybrid vehicles, with the energy transition unfolding more slowly than forecast.

He added that demand from jewellery manufacturers had also been strong.

South African mining companies, which account for more than 70% of the world's platinum supply, have cut unprofitable production over the past two years after metal prices collapsed, amid warnings that the industry was in terminal decline.

While the recent platinum rally has brought relief to miners, it is still below levels needed to support new production.

"Primary supply is constrained and secondary supply is just not coming to the market because the cost of recycling is still too expensive," Miller told reporters after a tour of Valterra's converter and processing plants.

He said the company estimates primary supply will decline by "between 15% and 20%" by the end of this decade due to a lack of investment in new mines and in extending the lives of existing assets.

"You'd need to see the PGM basket price increase by another 50% from where we are now and for it to be maintained at that level to incentivize new greenfield production coming online and earning a sort of a 10% return," Miller said.

He said the energy transition is not going to be as anticipated, "so we could see ICE (petrol) vehicles or hybrid vehicles around for a lot longer", he added. "Hybrid vehicles have more PGM loadings than an ICE vehicle does."