Vehicle efficiency to drive platinum demand: PlatAust
Rebecca Lawson
Wednesday, 21 February 2007
THE future is bright for platinum, according to Platinum Australia managing director John Lewins, where future demand for the precious metal could lend some serious weight in vehicle efficiency and in the science arena.
Platinum Australia managing director John Lewins
Speaking at the RIU Explorers conference in Fremantle yesterday, Lewins said future demand for platinum will be driven by light diesel vehicles, which are increasingly penetrating the market in the US, Asia, Australia and Eastern Europe.
"To put it into context, about 60% of light cars are diesel in Europe whereas in US, it's less than 5%," Lewins said.
"The importance of platinum is that the majority of the catalyst converter in [the] diesel sector is platinum as opposed to petrol … so as the fuel price increases, people are moving more and more to diesel vehicles which are far more efficient, and that means we need far more platinum for the catalyst converters."
In addition, demand for platinum will also be driven in the science area where according to Lewins, recent research has used the precious metal in biomedical eyes, which can help a blind person to see, and the precious metal is also being used in new applications in fuel cells.
Along with the usual culprits of demand in the glass and chemical industries and jewellery, the only logical conclusion Lewins could provide for future supply is to increase output from South Africa, which produces around 80% of the world's platinum, all thanks to the Bushveld igneous complex.
The other "significant" producer is Zimbabwe and Lewins said the country had potential to become a significant producer, however "issues" were standing in its way.
A downside to having the majority of the world's consumption from the one place, is the current "significant cost pressures" facing producers in South Africa, where the No. 1 platinum producer in the world, Anglo Platinum, reported that unit costs went up 21%.
Lewins said mines getting deeper and labour becoming more expensive were the reasons for the cost increase.
Platinum Australia has three advanced projects in South Africa and Australia where all of them are in feasibility study stage or beyond.
The company has $22 million cash on hand and has a market capitalisation of $280 million.
Shares in Platinum Australia climbed 3.5c to $1.37 in trading this morning.
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