Can Australia go platinum? Here are the ASX explorers trying to find out
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Australia has no track record as a player in the platinum group metals sector — but rising demand from car makers is prompting a few ASX-listed explorers to take a closer look.
One company in particular — Podium Minerals (ASX:POD) — is hoping to become Australia’s first producer.
Platinum group metals (PGMs) include platinum, palladium, ruthenium, rhodium, osmium and iridium.
Their biggest use (more than 50 per cent) is in auto catalysts — a critical part of catalytic converters used to reduce pollution in 98 per cent of cars. (The International Platinum Group Metals Association calls auto catalysts “the most important pollution abatement device ever invented”.)
Other applications include jewellery, fuel cells and industrial products ranging from computer hard disks to dental crowns.
South Africa, Russia and Zimbabwe account for about 85 per cent of global PGM production.
>> Scroll down for a list of ASX stocks with PGM exposure, courtesy of leading ASX data provider Mak Corp
The bulk of Australia’s PGM resources are in Western Australia and the Northern Territory, but there are very few explorers looking for PGMs here — and until recently there were no pure play PGM companies.
Artemis Resources (ASX:ARV) has a 70 per cent-owned PGM project in the Pilbara region of Western Australia in partnership with Platina Resources (ASX:PGM).
The company says its Munni Munni project is the largest unmined primary PGM deposit in Australia with a resource of 1.1 million ounces of palladium, 830,000 ounces of platinum, 152,000 ounces of gold and 76,000 ounces of rhodium.
However, Artemis has diversified into other areas and is now focused on building its Pilbara conglomerate gold footprint as well as growing its nickel cache.
Panoramic Resources (ASX:PAN) is another player in PGMs, but again its key focus is on other commodities.
The plunging nickel price forced the company to mothball its projects in Western Australia in 2015 and 2016 and Panoramic diversified into PGMs.
The Panton project is located 60km north of Halls Creek in the East Kimberley region of Western Australia and hosts a resource of around 2 million ounces of contained platinum and palladium.
While Panoramic is continuing to investigate the use of alternative processing options to improve the economics of the project, its main focus is on restarting production at its Savannah nickel mine.
Enter Podium Minerals (ASX:POD), which made its debut on the ASX at the end of February and wants to help establish Australia as an alternative supplier of PGMs to the world market.
“We see Australia as a real opportunity,” chief Tom Stynes told Stockhead.
“We see [South Africa, Russia and Zimbabwe] as having supply risk, investment risk and we see a supply alternative from Australia as a potential real positive.”
Cars to drive PGM demand
The biggest demand for PGMs comes from car makers. Petrol and gasoline car makers mainly use palladium and diesel cars require mainly platinum.
Europe, which is leading a crackdown on emissions, has rolled out new regulations which have led to a decline in diesel vehicle sales, but an increase in petrol and hybrid vehicle sales.
Although petrol and hybrid vehicles now use palladium in the auto catalysts, experts believe platinum works better and longer term would replace palladium completely.
“You’ve got to look at the worldwide demand and as those stricter Euro emissions standards get rolled out across other jurisdictions – in particular China has got their own equivalents they’re rolling out – then auto catalysts have got to be part of that solution,” Mr Stynes explained.
PGM heavyweight Anglo American Platinum predicts global sales of gasoline and hybrid cars to rise at a compound annual growth rate of 2.6 per cent between 2017 and 2024, which would more than offset the 0.8 per cent rate of decline of diesel vehicles.
The palladium market is in deficit by around 600,000 to 700,000 ounces, which has more than doubled the price of the commodity in the past two years.
Platinum, meanwhile, is in a slight surplus – about 100,000 ounces – and prices are down near historically low levels.
The problem in front of junior players like Podium is selling themselves to investors.
PGMs are not a well-understood market given there are very few players with exposure to PGMs and even less that consider PGMs as one of their main commodities.
Over the past year, half of the stocks tracked by Stockhead have made gains, but that is likely due to their focus on other headline grabbing commodities.
Here’s a list of ASX stocks with exposure to PGMs courtesy of leading ASX data provider Mak Corp. (Scroll or swipe for full table)
Artemis is a prime example, having gained 164 per cent in the past 12 months largely due to the heat surrounding the Pilbara conglomerate gold story.
Australia United Mining (ASX:AYM), which is mainly looking for gold in New South Wales and Queensland, led the charge up, adding 300 per cent to its share price.
However, pure play Podium has slipped 32.5 per cent since it lit up the boards in February.
“One of the challenges that we have in front of us, particularly as a new and junior company, is we’re looking to sell a product that is not well understood and we’re obviously going to do our bit to try and educate our investors,” Mr Stynes said.
Podium has already identified a 15km strike of near-surface PGM and gold mineralisation, as well as defined targets for nickel-copper sulphides, at the Parks Reef prospect, part of its Weld Range landholding that lies about 500km east of Geraldton, Western Australia.
The company is working towards defining a resource for Parks Reef and expects to release the final results of its maiden drilling campaign soon.
Stockhead is proud to use Mak Corp as a provider of great value, accurate and reliable data on ASX-listed mining stocks. For more information head to Mak Corp’s website.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.