Hi Paul, as you pointed out investing in the PGM mining space is almost inextricably linked to investing into South Africa due to the Bushveld complex, a remarkable "geographic feature". Investing into SA comes with the classic EM risks which are not to be underestimated. As an example during 2018/9 the end of the Zuma years the risk of nationalisation of the mines was very real. If the current president is turned or the GNU dissolved that risk arises again. The Mining Co. hold a worrying place in the minds of the "mining class" due to the history of the country. The Marikana massacare brought this to the fore not long ago. The mines have over the past decade had to contend with very severe energy restrictions. That all said, over the long term, the ZAR should continue to depreciate against the USD decreasing ZAR based costs.
In addition to the above, how do you consider the risk either a replacement material or synthetic platinum?
That all said, South Africans are wonderfully resourceful and well versed in navigating a tricky local environment. The country also has limited financial options and cutting the miners off would be a real shot to their own foot. Lastly, a trip to visit your investment would a joy.
Thanks, PJ, for that dose of reality. I see no likelihood that synthetic platinum will become available at a reasonable cost. Transmutation of the elements is possible, but rarely practical. And one does not get the useful catalytic properties from other elements, except palladium sometimes. Perhaps also other PGMs, but they are all expensive to mine.
I agree that the EM risks you detail are real. The question not answered for me is what would make them worthwhile. Does it take a double within 5 years? or a triple, or what? Thinking about this will be part of my further analysis.
As you say in your note, one has to be comfortable with South Africa. Curious to know if you came across any ETFs which might consider as a proxy? (e.g., to mitigate some of the currency risks of the South African Rand or the friction of SA markets)
I admit to bias against ETFs, but also already think that there are large variations among these companies. If you select for large miners focused primarily on PGMs, it is a small group. That said, i don't think you want to look for 10% gains here. Need much more than that to justify the risks.
Unfortunately seems there are no pure play Platinum miner ETFs. The only ones I could find are mixed metal mining ones which throw in Rio Tinto, Glencore etc. Ah well.
Hi Paul, as you pointed out investing in the PGM mining space is almost inextricably linked to investing into South Africa due to the Bushveld complex, a remarkable "geographic feature". Investing into SA comes with the classic EM risks which are not to be underestimated. As an example during 2018/9 the end of the Zuma years the risk of nationalisation of the mines was very real. If the current president is turned or the GNU dissolved that risk arises again. The Mining Co. hold a worrying place in the minds of the "mining class" due to the history of the country. The Marikana massacare brought this to the fore not long ago. The mines have over the past decade had to contend with very severe energy restrictions. That all said, over the long term, the ZAR should continue to depreciate against the USD decreasing ZAR based costs.
In addition to the above, how do you consider the risk either a replacement material or synthetic platinum?
That all said, South Africans are wonderfully resourceful and well versed in navigating a tricky local environment. The country also has limited financial options and cutting the miners off would be a real shot to their own foot. Lastly, a trip to visit your investment would a joy.
Thanks, PJ, for that dose of reality. I see no likelihood that synthetic platinum will become available at a reasonable cost. Transmutation of the elements is possible, but rarely practical. And one does not get the useful catalytic properties from other elements, except palladium sometimes. Perhaps also other PGMs, but they are all expensive to mine.
I agree that the EM risks you detail are real. The question not answered for me is what would make them worthwhile. Does it take a double within 5 years? or a triple, or what? Thinking about this will be part of my further analysis.
Thanks Paul. Super interesting.
As you say in your note, one has to be comfortable with South Africa. Curious to know if you came across any ETFs which might consider as a proxy? (e.g., to mitigate some of the currency risks of the South African Rand or the friction of SA markets)
Thanks for Commenting.
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I admit to bias against ETFs, but also already think that there are large variations among these companies. If you select for large miners focused primarily on PGMs, it is a small group. That said, i don't think you want to look for 10% gains here. Need much more than that to justify the risks.
Makes sense. Thank you.
Unfortunately seems there are no pure play Platinum miner ETFs. The only ones I could find are mixed metal mining ones which throw in Rio Tinto, Glencore etc. Ah well.
Thanks as usual Paul. For some reason we have the same 3 investment interests: REITs, energy and miners. Well done.
Thorough work, as usual, Paul. I'll have to re- read but very interesting. Thanks for the analysis!
Investment decisions later this tells me I need to buy my wife some platinum jewelry !! Before it goes back up like gold 😂
😂😂😂