The metals of the platinum group have also had a difficult development in terms of pricing. Below you can see market prices for palladium (1st chart) and platinum (2nd chart) on a 12-month basis in USD per ounce (as of February 19, 2024, 6:00 p.m.):

Source: Frankfurt Stock Exchange (https://www.boerse-frankfurt.de/rohstoff/palladiumpreis ) and (https://www.boerse-frankfurt.de/rohstoff/platinpreis )

12-month charts: Palladium in deep red, platinum remains at a weak level Palladium has depreciated by -36.23% in the last 12 months. For platinum, the decline in the same period was only -1.34%, but if you were to extend this chart a bit further into the past, you would quickly find yourself in the double-digit percentage decline as well.

The reasons for the depreciation are varied. Most recently, the difficult macroeconomy has been weighing on the metals of the platinum group. The higher interest rates have caused these metals to lose attractiveness in terms of investment compared to fixed-income assets (e.g. bonds or savings accounts). At the same time, the higher interest rates and the struggling economy in some countries have also lowered the industrial demand for platinum and palladium. Both metals are primarily used in catalytic converters – especially in combustion vehicles.

Anglo American Platinum reports massive decline in profits Affected by this crisis is, above all, Anglo American and its also publicly traded subsidiary Anglo American Platinum (Amplats), headquartered and operationally centered in platinum-rich South Africa. With a market share of more than 30%, the company is the largest platinum producer in the world and the second largest palladium producer with around 1 million ounces. Just a few days ago, Amplats published its latest figures, which were anything but excellent.

The company reported a 24% drop in revenue for 2023. However, the operating result (adjusted EBITDA) fell by -67%, and net profit even by -71%. As a result, the profit margin and cash flow also decreased significantly. The dividend was immediately reduced by -81%.

As you can see from the two charts, palladium proved to be the biggest burden for Amplats. However, the company also suffered major declines in realized prices for rhodium (also a platinum metal) and, last but not least, nickel.

Amplats cuts thousands of jobs and puts projects on hold Anglo American Platinum now wants to react to the crisis and for this, they will have to resort to cost-cutting measures. Accordingly, around 3,700 jobs are set to be cut at the company’s South African operations. This would be about 17% of the total workforce. This is the last resort, emphasized Amplats CEO Craig Miller. The manager is aware of the challenges in South Africa regarding unemployment and the socioeconomic consequences of the announced measures.

In addition to job cuts, Amplats also plans to pull the plug on some growth investments. In total, savings of 10 billion South African rand (around 490 million euros) are to be achieved in the current year. The planned cuts affect, among other things, projects in the Amandelbult complex, where the company already operates two underground mines. The company will continue to do everything in its power to improve efficiency and reserves the right to take appropriate measures if the prices of platinum metals continue to fall, Amplats CEO Miller said with regard to possible additional measures.

Anglo American Platinum is certainly not the only platinum player currently in crisis. Other industry representatives, especially from South Africa, are also looking to cut jobs and delay investments. These include Sibanye Stillwater and Impala Platinum.

My conclusion for you The devaluation of the commodity sector last year also hit the platinum metals hard – especially palladium and rhodium. Similar to nickel or lithium, the platinum industry is now also reacting to the crisis with investment cuts and job cuts. The extensive measures taken by Anglo American Platinum speak volumes.

The tightening of the market is giving the prices of the platinum group metals a certain potential for a comeback. As early as December, the influential World Platinum Investment Council predicted a deficit for the platinum metals that could increase to 8% of demand by 2027. Experts attribute this forecast to the increasingly frequent profitability problems of mines in the wake of price declines. The risk of supply shortages will worsen as a result, according to the organization.

So it remains exciting. What you, as an investor, should not underestimate: Platinum metals, especially platinum itself and palladium, are important raw materials for catalytic converters and, as such, contribute to improving the environmental balance of diesel and gasoline vehicles. The era of combustion engines is by no means over, especially given the sluggish growth in electric car sales in recent times.