Platinum stocks a good bet in 2025 – but there’s a catch

Analysts are cautiously optimistic about platinum group metal (PGM) producers in 2025, but the sector’s performance could be at risk if global demand for new energy vehicles does not swing their way.

This is according to Eunomix founder and CEO Claude de Baissac, whose comments come after the Public Investment Corporation increased its holding in the platinum miner Sibanye-Stillwater to 15%. 

Baissac explained that the future of PGMs hangs in the balance of the battles for new energy vehicles – mainly, whether hybrids or battery electric vehicles will be most popular among buyers.

This is because platinum is a key resource needed in the production of hybrid cars. It is the material most commonly used in catalytic converters that reduce the emissions of traditional internal combustion engines and hybrids. 

However, electric cars do not need catalytic converters or platinum because they run on electric motors powered by batteries and produce no emissions from exhaust gases.

Therefore, platinum could see a significant boost in demand if consumer preference leans the way of hybrid cars rather than electric vehicles.

The sales of electric cars in major markets like Europe have slowed down, with consumers rather opting for hybrid cars. 

While De Baissac believes electric vehicles will be the preferred vehicle in the long run, he views platinum as a safe medium-term bet for its use in hybrids. 

Currently, PGM producers are struggling as the price of platinum is under pressure due to low global demand and the highly cyclical nature of mining.

De Baissac highlighted another hindrance separate from poor global demand that negatively impacts PGMs’ stock prices. – “policy that has not been particularly friendly.” 

He explained that various policy issues can be changed to improve the situation of PGM producers. “Cheaper electricity, like we used to have, proper logistics, and if we don’t have red tape, and if we don’t have 3,000 licenses,” he said.

“We need some serious global demand that would then give the producers the confidence to know that they are going to be able to realise a profit,” said independent analyst Jimmy Moyaha. 

“We are a big player with large deposits,” De Baissac said. “We must ensure while we still have a market for this thing, it can be produced efficiently.”

South Africa holds 87% of global PGM reserves, specifically 70% of the global platinum supply, and is the largest palladium producer in the world. 

Russia is the second largest producer of palladium globally, but its war with Ukraine may mean that there will yet be a shortage. This could, therefore, increase the world’s reliance on South African palladium. 

To diversify their offerings, PGM producers have also begun exploring other regions and sectors to expand their operations. “Sibanye is looking at coal. Others are looking at Australia,” Moyaha said.

PGM producers realised they “cannot rely on one source of demand like they were able to in the past”. 

“If you are going to go into PGMs, if you are going to be holding that long view, understand that you could potentially be in the same, very flat movements over the coming weeks and even the coming months,” Moyaha said. 

The share price of PGMs may start picking up again towards the second half or end of the year. 

However, Moyaha said the thing PGM investors have learnt over time about the share price is that “the moment they start moving, they are not going to wait”.

“We cannot predict what’s going to happen in 10 years’ time. We cannot even predict what will happen in two years,” De Baissac said. 

Therefore, he recommended a balanced and diversified portfolio in terms of commodities, sectors, companies and the geographic areas where they are from, where they are operational and where they sell.