Platinum pays off

Despite its perky price per ounce, platinum has never attained the lofty profile of its neighbour in the periodic table, gold. It’s a regular at the punchy end of a frequent flyer programme, and as a credit card it can do the old “Open Sesame” trick in a nightclub such as Platinum Lace, which claims somewhat surprisingly to have been voted the “best gentlemen’s club in London” on more than one occasion. It’s handy in a catalytic converter, but its price volatility is more than that of gold, which remains the metal of choice as a safe haven.

Northam is doing a decidedly competent job of demonstrating that the metal can be a tidy earner in the hands of a disciplined operator, with its results for the year to June showing a record operating profit of R2.4bn.

The market as a whole is playing into its hands, with demand on the rise and supply from primary producers predicted to decrease. Northam is investing to grow all its operations into long-life producers of platinum group metals (PGMS), while keeping pressure on the cost curve.

Key to the demand side is the outlook for automotive PGM use, as stricter emissions tests require higher PGM loadings. This market is expected to be led by China, the world’s largest vehicle manufacturer and market by number of units produced, which from July 2020 will be rolling out new emissions standards that will be tighter than those in Europe. Northam continues to invest for the long term, with R2.3bn of capex forecast for 2020, and if the market continues to improve, shareholders should be sitting pretty.

Platinum is a regular at the punchy end of a frequent flyer programme, and as a credit card it can do the old ‘Open Sesame’ trick in a nightclub