BGS Supply Risk List: Why Platinum Is On It

The British Geological Survey (BGS) has a risk list outlining the relative threat to supply of chemical elements and element groups that are needed to maintain the global economy.  A visualization of the list is available through this infographic.  Of the 52 items, platinum group elements are among the four with an 8.5 out of 10 rating on the index, which marks them as very high at risk. 

A disruption of platinum supply could have widespread adverse effects.  In addition to its number one role in emission systems, the metal is used in electronics, such as hard disk drives and LCD monitors.  It is used to make explosives, fertilizers and anti-cancer drugs.  Platinum is also used for oil refining. 

Using the four equally weighted criteria discussed below, the BGS concluded that the metal is part of a group that faces very high supply risks. 

Scarcity

Though it is often grouped with other precious metals, platinum is the rarest.  With a crustal abundance of only .0015 parts per million, the BGS recognizes scarcity as a strong risk factor. 

Production concentration

When production of a commodity is concentrated in a few countries, the BGS says supply risk may increase.  Using their World Mineral Production data, the agency assessed the top three producing countries and the percentage of world supply from the top supplier. 

That data, ranging from 2005-09, shows that South Africa accounted for 80 percent of the global platinum production.  Russia provided 11 percent and another 4 percent came from Zimbabwe. 

That South Africa produces the bulk of the world’s platinum is reasonably a cause for concern.  The data reports a 4 percent decline in production in 2009, noting the industry was hard hit by issues such as safety stoppages, strike action, and geological issues. 

In 2012, the nation’s platinum mining industry continues to face these problems and they are becoming more challenging.  Production is getting more expensive and requiring deeper digging.  Labor disputes and safety stoppages are becoming greater forces to be reckoned with and the pressures are taking a notable toll on the industry. 

Aquarius Platinum (LSE:AQP,ASX:AQP,JSE:AQP) says it will review the Everest mine because strikes and safety stoppages have curbed output.  The company plans to limit production for the 12 to 18 months of review.  Anglo American Platinum (LSE:AAL,ADR:AAUKY) reported its production slipped over the last year by a fifth due to stoppages.  And, Zimplats (ASX:ZIM) recently announced that strikes at its Rustenberg unit were costing 3,000 ounces per day. 

The BGS data showed a slight production increase in Russia in 2009, but reported Canada’s production as falling 41 percent in 2009. 

Reserve base distribution

The BGS also thought it important to assess where elements may be produced in the future.  For this, they used US Geological Survey data, which revealed that of the world’s 80,000,000 kg platinum reserve base, 70,000,000 kg lie in South Africa.  Russia and the US ranked second and third respectively. 

It should be remembered that this list assesses possibility, but there is also reality.  The Johnson Matthey 2011 Platinum Interim Review forecast a 6 percent supply increase, with noted contributions from North America and Zimbabwe.  South Africa is not expected to be a significant contributor and Russian production is expected to be flat. 

Governance

For this final criteria, the BGS used political stability rankings from the World Bank, again focusing on the top three producers.  These measure the perception of likelihood that a producing nation’s government will be destabilized or overthrown in an unconstitutional or violent manner. 

South Africa ranked 44.3, Russia ranked 18, and Canada ranked 81. 

According to the World Bank, these rankings indicate the percentage of countries worldwide that rate lower.  This would suggest that relative to most countries Canada is politically stable, but Russia is not. 

A supporting explanation was not provided for the rankings, but it was noted that a functioning democracy could receive a low ranking since issues such as terrorism or political violence can still arise. 

Opportunities

High supply risks do not change the fact that for the foreseeable future the world is largely dependent on South Africa for platinum.  Demand was not a consideration when compiling the BGS risk list, but it is one that certainly shouldn’t be overlooked by investors and miners. 

Governments, industry, and consumers have been warned not to take platinum for granted or to become over-reliant on it.  But, it is integrated into society in a way that makes it difficult to change habits surrounding its use. 

With the emissions standards in many nations, platinum use is essentially required by law.  Until people trend toward different forms of transportation or new pollution technology is developed, the metal’s use cannot be eliminated.  Substitution is also highly improbable for many other applications where platinum is used. 

Given the on-going demand, the obstacles to significant production increases in South Africa, and the minimal contribution to supply from other sources, miners should be carefully assessing the potentially rewarding opportunities associated with this rare metal.  The BGS supply risk list is a reminder that the need for secure and diverse platinum supply is well recognized. 

Securities Disclosure: I, Michelle Smith, do not hold any equity interests in the companies mentioned in this article. 

Get the Latest Platinum Investing Stock Information

Get the latest information about companies associated with Platinum Investing delivered directly to your inbox. 

Overview

INN's mission is to be the world's number one source of independent, unbiased news and education helping investors realized their financial goals.  We also strive to be internationally respected for our integrity, our people and our commitment to excellence.  Therefore, we are very concerned with the privacy rights of our audience and are committed to protecting the information collected about you. We have taken extensive measures to protect the confidentiality of your personal information and to protect your data from misuse and unauthorized access or disclosure.  Unfortunately, no data transmission over the Internet can be guaranteed to be 100% secure.  As a result, Dig Media cannot ensure or warrant the security of the information you transmit to us and you do so at your own risk. 

Contact Information

Our postal address is

L200 - 560 Beatty Street,

Vancouver, BC V6B 2L3

We can be reached via e-mail at info@digmediasolutions.com or telephone at +1-604-688-8231

Information Collected

For each visitor to our website, our web server automatically recognizes no information regarding the domain or e-mail address. 

We collect information volunteered by the visitor, such as survey information and/or site registrations, name and address, telephone number. 

The information we collect is used to notify visitors about updates to our website, shared with other reputable organizations to help them contact visitors for marketing purposes. 

With respect to cookies: When you visit our websites, we send one or more cookies, a small file containing a string of characters, to your computer that uniquely identifies your browser during your visit.  We use these cookies to maintain your connection as you move from page to page, and to ensure anything you submit, such as a comment or a form, is not rejected.  You can reset your browser to refuse all cookies or to indicate when a cookie is being sent.  However, some website features or services may not function properly without cookies. 

If you do not want to receive e-mail from us in the future, please let us know by sending us e-mail at the above address. 

Persons who supply us with their telephone numbers on-line may receive telephone contact from us with information regarding new products and services or upcoming events.  If you do not wish to receive such telephone calls, please let us know by sending us e-mail at the above address. 

Ad Server

With respect to Ad Servers:

Other third-party companies which place advertising on our site may collect information about you when you view or click on their advertising through the use of their cookies or other tracking technologies, which may include delivering targeted advertisements and marketing messages based upon the third party websites that you visit, or other purposes.  We cannot control this collection of information and are not responsible for the privacy policies and data collection, use and disclosure practices of these third party advertisers.  You should contact these third party advertisers directly if you have any questions about their use of the information that they collect from you.  Google-DoubleClick DFP is our third party ad server.  If you would like to know more about their information gathering practices and opt-out procedures, please see Google ad policies. 

Also, if you would like more information about this practice and to know your choices about not having this information used by these companies, please see NAI Opt-out Options. 

Information Use

We only share personal information with other companies or individuals outside of the cases outlined above in the following limited circumstances:

We have your consent.  We require opt-in consent for the sharing of any sensitive personal information. 

We provide such information to our subsidiaries, affiliated companies or other trusted businesses or persons for the purpose of processing personal information on our behalf.  We require that these parties agree to process such information based on our instructions and in compliance with this Privacy Policy and any other appropriate confidentiality and security measures. 

We have a good faith belief that access, use, preservation or disclosure of such information is reasonably necessary to (a) satisfy any applicable law, regulation, legal process or enforceable governmental request, (b) enforce applicable Terms of Service, including investigation of potential violations thereof, (c) detect, prevent, or otherwise address fraud, security or technical issues, or (d) protect against harm to the rights, property or safety of Dig Media, its users or the public as required or permitted by law. 

We may share with third parties certain pieces of aggregated, non-personal information, such as the number of users who searched for a particular term, for example, or how many users clicked on a particular advertisement.  Such information does not identify you individually. 

Remarketing

We may remarket your information.  Remarketing is a way for us to connect with users, based upon your past interactions with INN websites.  Third-party marketing vendors may be hired by INN to perform remarketing services.  As a result, third-party vendors, including Google, may show INN ads on sites on the internet.  Third-party vendors, including Google, use cookies to serve ads based on a user's prior visits to INN websites. 

To opt out of customized Google Display Network ads click here.  To find out more about how Google uses any data it collects please visit http://www.google.com/privacy_ads.html. 
Any information collected is used only for remarketing purposes and will not be used by them for any other purpose. 

Future Use

From time to time, we may use visitor information for new, unanticipated uses not previously disclosed in our privacy notice.  If our information practices change at some time in the future we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses.  If you are concerned about how your information is used, you should check back at our website periodically. 

Accessing Your Data

Please contact us at the address above for any additional questions about the management or use of personal data. 

Upon request we provide site visitors with access to communications that the visitor has directed to our site (e.g., e-mails, customer inquiries), contact information (e.g., name, address, phone number) that we maintain about them. 

Visitors can access this information by e-mailing us at the above address. 

Upon request we offer visitors the ability to have inaccuracies corrected in contact information. 

Visitors can have this information corrected by sending us e-mail at the above address. 

Security

With respect to security: We have appropriate security measures in place in our physical facilities to protect against the loss, misuse or alteration of information that we have collected from you at our site. 

Your Acceptance of These Terms

By using this site, or by submitting personal information to us, you signify your agreement to Dig Media's Privacy Policy and Terms of Use.  From time to time we may change or update our piracy policies.  It is your responsibility to check back regularly to inform yourself of such changes.  Your continued use of this or any Dig Media website following the posting of changes to these terms will be deemed as your acceptance of those changes. 

The foregoing policies are in effect as of August 1, 2012.  Dig media reserves the right to change this policy statement at any time by posting the revised policy to this website.  This statement and the policies outlined herein are not intended to and do not create any contractual or other legal rights in or on behalf of any party. 

If you feel that this site is not following its stated information policy, you may contact us at the above addresses or phone number.