The platinum deficit prediction for this year is up 77% to close to a million ounces.

This year’s platinum deficit is projected to be a record 983 000 oz amid consistently growing industrial demand on course to becoming the strongest on record, boosted 17% by glass capacity expansions.

Moreover, higher loadings and increased substitution of platinum for palladium have pushed up automotive demand by 12%, with stronger-than-expected positive investment demand resulting in an upped full-year forecast well beyond the 400 000 oz mark.

Rest-of-year platinum market indications are pointing to the need to secure platinum supplies beyond the two main sources of primary mining output and recycled collection.

Over the last five years, between 73% and 77% of total annual platinum supply in refined ounces has come from mining but the biggest deficit in ounce terms now points to demand having to be met from sources other than mined and recycled platinum.

That means effectively liberating platinum from above-ground stocks, but still unclear is exactly what pricing levels are needed to do that.

Amid platinum’s great projected supply fall and big projected demand rise, Mining Weekly put these questions to World Platinum Investment Council (WPIC) research director Edward Sterck. (Also watch attached Creamer Media video.)

Mining Weekly: Your latest Platinum Quarterly indicates that overall first-quarter supply remained constrained and is forecast to remain flat for the full year. What are the downside risks to mined supply in 2023 and what are the other risks to supply?

Sterck: There are a number of challenges facing mine supply at the moment. In South Africa specifically, obviously, there's the electricity shortage, and then more broadly, there have been some operational difficulties at some operations in North America, including some damage to shafts at an operation in Montana. Then in Russia, Nornickel is having to try and navigate its way through the headwinds posed by Western enacted sanctions against Russia. The mine supply projections we've put out for 2023 include an element of all those challenges. If you aggregate guidance, the supply projections are towards the bottom end of the aggregate guidance range that's published by all the companies involved. But that said, if, for example, the power shortage in South Africa continues to worsen and accelerate through the winter months, which are obviously the period for peak electricity demand in South Africa, then yes, there are further potential supply risks to the downside by anywhere between 5% and 15%, so potentially, several 100 000 oz lower than currently projected.

What is drawing investors back to platinum and to what extent will the recessionary environment help or hinder the return of increased platinum investment demand?

If we think about the retail investors, they're driven by preservation of capital during periods of uncertainty. Certainly, the banking crisis that has enveloped parts of North America, and more broadly, has driven a certain degree of interest in buying platinum bars and coins on the retail side, and that buying can be quite material. On the institutional investor side, the motivations are a little bit different. If we think back over the last couple of years, we've seen quite significant outflows from ETFs and those outflows have been driven by two factors. Firstly, investors in South Africa generally had a preference for the mining equities over the metal on expectations of being paid significant dividends by the mining companies. Those expectations certainly came to fruition, and it was arguably a sensible trade there. Then secondly, investors more broadly have been looking for yield. A metal ETF is a non-yielding asset and with rising real interest rates, investors have been compelled to look elsewhere. But in terms of what's bringing them back, within South Africa the challenges facing the mining industry mean that those super dividends may not be so super ...