One of SLV's major attractions is the very high rhodium content in the tailings it's going to be treating: > 10% of the total PGE grade based on its reports.
This article from the South African "Business Report" newsletter is v useful;
"Rhodium price heats as greens warm to PGMs March 29, 2007"
By Jesse Riseborough and Xiao Yu
Melbourne - The rise of global "green power" is boosting the prices of platinum group metals (PGMs), which are used in devices to cut exhaust emissions. Merrill Lynch and JPMorgan Chase say rhodium may rise by about a quarter this year.
"This green planet thing is really taking off," Steve Shepherd, a JPMorgan analyst who forecasts a 24 percent gain in average rhodium prices, said last week. "These PGMs are beneficiaries of that big time."
Global demand for catalytic converters in cars is soaring because governments are tightening laws on vehicle emissions and vehicle demand is surging in China, the world's second-largest car market.
Rhodium is a silvery-white by-product of platinum production worth nine times more than gold bullion.
"The global automobile market will grow rapidly, led by China," Jin Xiangyun, an analyst at Beijing Antaike Information Development, said this week. "More importantly, more rigid standards to control emissions will be implemented worldwide, which will strongly boost rhodium consumption."
Rhodium, which has risen fourteenfold in the past four years, traded at $6 175 (R45 560) an ounce last Friday, according to the Metal Bulletin. So far this year, it has risen 11 percent and averaged $5 900.
Platinum futures rose to a record on the Tokyo Commodity Exchange on Monday and platinum for immediate delivery reached a record $1 402.50 on November 21. Spot platinum has risen 9.3 percent this year. It fixed at $1 246 in London yesterday afternoon, $7 higher than Tuesday's second fix.
The price of rhodium might rise by a quarter to average $5 638 this year, Merrill Lynch analysts, led by Vicky Binns, said earlier this month, telling clients to be long on platinum stocks such as Anglo Platinum. The stock has risen 26 percent this year. It added 1.86 percent to R1 095 on the JSE yesterday.
EU leaders set tighter targets this month for cutting greenhouse gases and curbing the use of fossil fuels. European regulators recommended a cap on carbon dioxide emissions from cars, setting up a clash with vehicle makers as Europe extends a campaign against global warming.
"The difficult part is the Far Eastern markets of the likes of China, maybe India. They are all talking about exhaust emission standards, but we haven't got a clue what they are going to do," said Shepherd. JPMorgan has boosted its long-term platinum price target 19 percent to $1 100. "These are quite big car markets and truck markets as well, and growing rapidly."
Platinum, which is also used in electronic devices such as iPods and computer hard disks, has gained for four consecutive years because of the new emissions laws. About a quarter of demand for the metal, which has been in deficit for eight consecutive years, is used in catalytic converters to turn carbon monoxide into less harmful gases.
Palladium can be substituted for platinum in petrol vehicle converters. Spot palladium has gained 8.5 percent this year.
Rhodium may keep outpacing other precious metals because it cannot be substituted in diesel versions of the converters, which are used to reduce nitrogen oxide emissions.
John Lewins, the managing director of Platinum Australia, said last month: "While you need less, there isn't a substitute; you really have to put rhodium into those catalytic converters."
Demand for diesel-powered light vehicles was soaring, driven by environmental standards, Lewins said. About 60 percent of light vehicles in Europe were diesel, while in the US it was only about 5 percent.
"There is a general view of something like 5 percent growth" for rhodium each year, he said. "That is a fairly strongly held view in the industry."
To be sure, Anglo Platinum chief executive Ralph Havenstein said last month that the group was "uncomfortable" with current prices of palladium and rhodium and believed palladium would decline by as much as one-third and rhodium by two-thirds in the "long term".
South Africa produces about 90 percent of the global rhodium supply.
Northam Platinum Holdings, the world's fourth-largest platinum producer, forecast in January that the price of rhodium might climb to a record $7 500 this year, beating the 1990 high of $7 000.
It reached a 16-year high of $6 275 last year.
Tariq Salaria, a metals analyst at Standard Chartered, said this month: "More stringent emissions regulations will keep demand firm from the autocatalyst sector, the dominant end use accounting for in excess of 80 percent of demand." He forecast a 26 percent gain in rhodium prices.
"In recent years, supply has not been capable of matching the increase in demand."
Heraeus Holding, which owns five precious metal refineries, said growing demand by Asian makers of flat panel glass used in computer and television screens might boost rhodium prices further. - Bloomberg
Johnson Matthey holds to forecast on strength of precious metals unit
London - Johnson Matthey's second-half trading was still in line with its January update, the British platinum specialist said yesterday.
It signalled robust performance in its precious metals unit.
"The outlook for the new financial year is encouraging," it said. The second half had been "particularly strong" for its precious metal products division, buoyed by strength in global platinum markets.
Citigroup analysts had forecast 16 percent annual growth in earnings before interest and tax in Johnson Matthey's precious metals unit. "The statement suggests growth may have been higher," they said in a note.
Johnson Matthey, the world's biggest platinum distributor, said catalysts, its largest division, continued to grow well, with demand on the upswing because of tougher vehicle emissions rules in Europe and North America. It has the biggest share of the global market for heavy-duty diesel catalysts.
Citigroup analysts maintained their hold recommendation for Johnson Matthey, saying earnings estimate upgrades would be needed for the stock to outperform.
The shares fell 1.3 percent to £15.63 (R222) in midday trade yesterday, valuing the company at almost £3.4 billion. The stock has lagged the UK chemicals sector by about 12 percent over the past year. - Reuters
This is all good for SLV's cashflow potential....
I hold.
SLV Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
