Platinum, among the rarest and costliest of metals, is prized in jewelry because of its beauty, hardness, luster, strength and durability. The metal has critical commercial uses, chief of which is in automotive catalytic converters, called autocatalysts. Together, 75% of global demand is attributable to these two uses.
Platinum is so rare that all of the metal ever mined would fill a room measuring less than 25 feet on each side. "Above-the-ground" platinum supplies would last about a year. This compares to an on-hand above-ground supply of about 25 years for gold. In nature it is generally found mingled with gold, nickel or copper.
Platinum is extremely resistant to oxidation and to corrosion, and does not tarnish. It is an excellent conductor of electricity. Its powerful properties as a catalyst–a substance that alters the rate of a chemical reaction without being consumed in the process–make it invaluable in many industrial applications, and as an investment.
Platinum Supply Issues
75% to 80% of all refined platinum comes from South Africa. 90% of all platinum deposits are concentrated there and in Russia.
There are only ten significant platinum mining companies in the world, most of them vertically-integrated enterprises. John Lewens, the Managing Director of one of these firms, Platinum Australia Limited, was quoted in a September, 2009 posting by miningweekly.com as stating that South Africa's platinum production had declined for the past three years, and was expected to remain flat, despite the significant growth in the metal's price. Lewins stated that the decline was largely caused by mine closures and cutbacks on capital expenditure.
The business of platinum production and refining is an extremely difficult, capital-intensive one, with inherent high barriers to entry. The extraction (mining) stage involves laborious hand drilling, followed by concentration and refining of the metal, complex processes that may take up to six months. A new platinum mine takes seven years to conceive, build and get up and running.
South African miners face several challenges to ramping up production to meet rapid changes in demand: a countrywide electrical power crisis with continuing disruption and rationing; labor union issues; having to dig to ever-greater depths to obtain ore; and lower quality ores. It is estimated that a volume of 7 to 12 metric tons of ore must be processed to produce a single ounce of platinum.
Demand Issues and Uses of Platinum
In a typical year, about half of the six million troy ounces of platinum mined are used in the catalytic converters of cars and other vehicles, both gasoline and diesel engine. Platinum converts burnt hydrocarbons, carbon monoxide, oxides of nitrogen and particulates into less harmful carbon dioxide, nitrogen and water vapor.
Worldwide new vehicle production significantly impacts platinum demand, along with the relative price and availability of palladium, another rare PGM* (platinum group metal) similar to and less costly than platinum, which competes for this market use.
Platinum Use in Jewelry
Use of platinum in jewelry peaked in 1999 - 2000, when over 50% of all platinum demand was dedicated to that use. By 2005, that figure had dropped to 40%, and in 2010, jewelry use is projected to account for only 20% of demand.
Japanese buyers have traditionally most coveted platinum jewelry, with Europeans and North Americans lagging well behind. Rising affluence in China has led to consumers there buying far more of the available platinum than was common for them even as recently as the 1990s.
Platinum, which is hypoallergenic, provides a secure setting for diamonds and other gemstones, enhancing their brilliance. Its flexibility is prized by jewelry designers. Because it has a unique color and luster and is normally more expensive than gold, it carries the cachet of a prestige adornment.
Since 1975, jewelry marked simply with the word "platinum" by law must contain at least 95 percent of the metal. Jewelry marked 950pt or 950plat also meets this threshold. By comparison, 14- and 18-karat gold contains 58.5% and 75% of that metal, respectively.
Before 1975 there was no requirement for platinum to be assayed and hallmarked, therefore there was no recognized standard. Because of this, most early pieces marked "plat" or platinum, may vary in fineness, and most would fail modern assay standards today.
Other uses for platinum include electrical-electronics (6% of total demand), glass products (5%), chemicals (5%), petroleum (3%), other uses such as medical-dental, spark plugs and fuel cells (7%). Demand by precious metals investors and speculators is modest but growing.
The current price of platinum, and other precious metals which are traded on public futures exchanges, are available.
*There are six Platinum Group Metals, or PGMs: platinum, palladium, rhodium, ruthenium, osmium, iridium. They are all rare, expensive, have similar physical and chemical properties, are clustered in the periodic table and tend to commingle in natural ores.
George Daleiden - I was a science major in college and later a career member of the Institute of Food Technologists. I worked in the processed food and ...
Join the Conversation