JOHANNESBURG (miningweekly.com) – Marketing investment in the jewellery sector provides platinum with its biggest, best and quickest return by a long shot, with platinum jewellery accounting for 30% of overall platinum demand and at least half of that demand coming from China.
Marketing spend on physical platinum investment promotion is the second-biggest return giver and marketing spend on industrial platinum applications comes in third.
Marketing works in platinum jewellery just as well as it does in diamonds, Anglo American Platinum (Amplats) CEO Chris Griffith tells Mining Weekly Online, a point that makes it appropriate to note that the ‘Diamond is Forever’ slogan is the most recognised slogan of the twentieth century, according to Advertising Age, with 90% of Americans familiar with it.
Likewise, for nearly half a century, South Africa’s platinum industry has been working at platinum jewellery promotion through Platinum Guild International (PGI), an organisation funded by Amplats, Impala Platinum, Northam Platinum, Sibanye-Stillwater, Royal Bafokeng and Lonmin.
Even under the toughest of circumstances of the last few years, platinum mining companies have continued marketing jewellery, in the knowledge that it creates demand for more ounces.
PGI reports that for every $1 of jewellery-related investment, PGI China has delivered $81 of revenue, PGI Japan $17 of revenue and PGI USA $10 of revenue - all good returns.
Additional jewellery marketing could, in the words of PGI CEO Huw Daniel, create demand for another 3.5-million ounces of platinum in China, where people buy 12-million pieces of platinum jewellery a year. This translates into 1.5-million ounces of net demand each year and the projections are that with greater marketing effort, in particularly the many tier-three cities of China, the five-million-ounce mark could be attained.
In India, where platinum has got ahead of diamonds as the forever love symbol, demand growth of 25% to 30% a year is coming off a relatively low base of 200 000 oz a year, with 500 000 oz a year in sight by 2020.
In the US, the conversion to platinum of only the heads that hold the diamonds on engagement rings would generate another incremental 150 000 oz of demand and in Japan, which has the highest per capita consumption of platinum jewellery, more than half of total jewellery sales value comes from platinum jewellery alone.
INVESTMENT-IN-METAL MARKETING OFFERS NEXT BEST RETURN
After jewellery, the next best source of marketing return is from investment in the metal – convincing people that a portion of their portfolios should be in physical platinum investment.
In 2019, such demand is forecast to be 530 000 oz, as exchange traded fund growth is accompanied by ongoing platinum bar and coin demand.
The launch of the high-purity 999.5 platinum bars forms part of a new strategic partnership between the World Platinum Investment Council (WPIC) and Chinese company Shenzhen Hengfu Yingjia (Hengfu), to develop the physical platinum investment market in South China.
WPIC and Hengfu research estimates that demand for platinum bar and other investment products in China could grow to between 300 000 oz and 500 000 oz.
Much product development work has been done with Bullion Vault, which is primarily a gold investment vehicle. The first step is making products available and then creating awareness of their availability. Investors need to be encouraged to invest, “not just in gold, but also in platinum”, says Griffith.
Industrial demand stimulation is showing growth, with the adoption of platinum catalysed hydrogen fuel cells gaining ground.
Hydrogen fuel cells use platinum because platinum is, “by a country mile”, the best metal to use, says Griffith.
“Of course, you’re not going to use platinum in a massive stationary fuel cell because space is not a problem. You don’t need the same energy density that you do in a vehicle. With a vehicle, you need a lot of power from a relatively small space and the best way to achieve the desired result in the available space is with platinum,” he says.
Positive from a cost point of view is that platinum loadings are expected to diminish over time: “Let’s say now it’s about 50 g of platinum in a fuel cell, we think that’ll go down to about 10 g to 15 g of platinum in a fuel cell in time. That’s a good outcome because it lowers overall cost and will still be three or four times the amount of platinum per vehicle used currently in autocatalysts,” he adds.
Amplats has helped, in anticipation of the emergence of the hydrogen age, to create the Hydrogen Council, a global initiative of leading energy, transport and industry companies with a united vision and long-term ambition for hydrogen to foster the energy transition.
Launched at Davos 2017, the council declared hydrogen the clean fuel that can take the world into a no-carbon future. The 13 companies involved are Air Liquide, Alstom, Anglo American, BMW Group, Daimler, Engie, Honda, Hyundai, Kawasaki, Royal Dutch Shell, Linde, Total and Toyota. Wanted by them is an exponential acceleration of the €1.4-billion yearly investment already under way to attain the Paris Agreement’s goal of a less than 2 °C rise above preindustrial era temperatures.
While it is certainly not as easy to change world behaviour, Amplats is itself involved in the establishment of seven hydrogen refuelling stations on the west coast of the US.
Discussion with government can be protracted, as South Africa has experienced on the issue of platinum coin development.
A number of conversations have taken place with the Department of Trade and Industry (DTI) and active help on government investment is provided by the Mapungubwe Institute for Strategic Reflection (Mistra), the local think tank on the hydrogen economy and fuel cell development.
“We’re having the right conversations with government. Yes, I think those conversations are slowly starting to develop. You’ve got to get the right people and it’s got to be the right environment, which includes some of Mistra’s work and the work in the DTI, and I’ve had a number of conversations with people that are going to help move the dial,” Griffith reveals.
But in demand terms, South Africa on its own is not going to move the dial and that task lies with the likes of China, Japan, Europe and the west coast of the US.
“There are about a million people engaged with the hydrogen economy and fuel cells in China. A million people is nothing within China’s population of a billion. But a million vehicles sold with fuel cells on them moves the dial materially for South Africans. What we’ve got to do is help the creation of that demand and find opportunities for beneficiation here in South Africa. Japan is exhibiting a mature way of helping to move the demand dial by granting the world access to the technology of hybrid cars, which use the same amount of platinum group metals as a normal petrol car,” he adds.
Positive steps are also being taken through the International Platinum Association. In that regard, Royal Bafokeng Platinum CEO Steve Phiri has told Mining Weekly Online of diesel alliances proving to governments and municipalities in Europe that diesel engines are able to perform similarly or even better then petroleum cars with the proper platinum loadings.
In Germany, Euro 5 cars will be allowed into the cities provided they emit below 270 g/km. Euro 6 cars are already emitting at a level of 80 g/km and below and retrofitted cars are emitting below 270 g/km.
That brings confidence to the consumer, made up mainly of the leasing and rental companies.
“The sentiment is improving,” said Phiri, with increasing hydrogen infrastructure being put in place to power platinum-catalysed fuel cells.