Commodity prices continue to surge amid growing tension between Russia and Ukraine. Economists say a spike in palladium prices could benefit some local mining companies such as Sibanye-Stillwater. The company is the world’s second-largest primary producer of palladium and the third-largest producer of gold.
Russia and Southern Africa are the largest producers of palladium. As tensions intensify between Ukraine and Russia, Russia has now been hit with sanctions preventing its mining companies to enter the palladium market.
Palladium is used in catalytic converters. Local mining company Sibanye seems poised to benefit from this crisis. The price of the precious metal has hit a record high of 2500 US dollars an ounce as demand rises.
Chief Economist at the Minerals Council of South Africa, Henk Langehoven, says the country’s dollar price index for gold, iron ore, coal and platinum have already moved by at least 50%. And this is mainly driven by the supply uncertainty of minerals around the world.
“The uncertainty around the technology and where the demand will go in terms of the new green economy and this adds further uncertainty around the supply of all sorts of minerals will certainly contribute to uncertainty and the prices rising faster than one would’ve expected. So, it would be certainly beneficial for South Africa seeing that we have this large group of platinum group metals at least but also gold as it heads against uncertainty will probably benefit from this.”
The impact of the Russia-Ukraine conflict on world markets:
Mergence Corporate Solutions Mining Director Peter Major says these tensions spell good news for South African mineral companies.
“Russia produces almost half of palladium; we can see it shooting up. I don’t think the platinum producers are complaining, they are getting close to record high metal prices again and this country is sure not going to complain after seeing that last budget, how mining added about R170 million to tax revenue that we wouldn’t have had if it wasn’t for this commodity boom. In a perverse sad way, this trouble with Russia, Ukraine, and the rest of the world is being more of a plus for South Africa than a negative.”
In the first two months of the year, South Africa’s minerals have already seen growth. And with the continued tensions in Russia, this can only spell good news for the country’s minerals.
A map that shows countries that have imposed sanctions on Russia:
