Russia Sanctions Look To Benefit Both Metals
A palladium/platinum addition to the latest report. Frank Hallam of South Africa developer Platinum Group Metals PTM PLG weighs in ON SANCTIONS TALK.
Palladium’s burst higher comes in the wake of possible G7 group sanctions on Russia. One report here.
I own sister metal platinum via Aberdeen‘s PPLT and via Ivanhoe Mines’ Platreef project. Platreef contains large economic reserves of palladium, platinum, gold, rhodium, copper, nickel osmium and other metals.
It was palladium that made moves this week, sparked by Russia sanction reports.
The Aberdeen Palladium Trust is PALL. Those shares rose 3%, including aftermarket. The PPLT platinum trust fell 0.8%, yet still holding its outsized gains of the past two months.
I believe platinum will benefit from tighter palladium supplies. Both are used in different ways in vehicles’ catalytic converters for clean (or cleaner) exhausts.
Frank Hallam at Platinum Group Metals, which is developing a mine in the same South Africa region as Ivanhoe’s Platreef, in part fortified my belief.
Here he is verbatim. [I have owned PLG PTM on and off since 2003 (really). I sold a small stake last year for an equally small profit. Platinum Group Metals shares, worth $203 million USD, rose 10% for the day (Friday) and trade at their richest level since March 2022.]
“Pt and Pd are generally interchangeable in auto catalytic converters. That said, it isn’t a perfect switch and the amount of each metal required for the same emissions control result varies. Pt is better for diesel and Pd is better for gasoline (not diesel).” — Frank Hallam, Platinum Group Metals
He continues, “They also have slightly different ‘best’ operating temperatures. The optimum mix is generally a three-way catalyst with Pd, Pt and rhodium. Depending on the application, economics, and emissions requirements, you can vary the mix ratio for best performance and cost.
“As for the possibility of sanctions on Russian PGMs, we have speculated on when that might occur. It remains to be seen if it will happen. For those end-users who are complying with sanctions and reporting their usage, I believe sanctions would tighten available supply.”
Here is the caveat, TCRs: “Knowing the source of your PGMs is not always easy; some metal would likely find its way to market through countries such as China or India. It may be that the Russians simply focus on sales to those countries, who will buy their PGMs despite sanctions.
“The rest of the world buys from everyone else. In the long run, sanctions will have a tightening effect on markets, and palladium prices will be somewhat higher, but it also seems unlikely that Russian metal will be absent from the marketplace.”
— Thom Calandra
thomcalandra.com