Platinum, Palladium and COVID-19: Who’s Reacting and How?

Platinum and palladium have been particularly affected during the COVID-19 crisis, with industrial demand slipping as automakers struggle with broken supply chains and production shutdowns.

As gold and silver benefit from safe haven status, platinum has spent Q1 trading down, reaching US$705 per ounce on April 1.

Palladium has been more volatile, hitting an all-time high of US$2,754 per ounce at the end of February, then falling 36 percent to US$1,743 by mid-March.

In the weeks since then, palladium has edged higher, hitting US$2,360 by the end of the month; however, it fell to US$2,143 on the first day of April.

The early month price drop for the platinum-group metal (PGM) may be the result of a lockdown in South Africa, which went into effect on March 27 and will end on April 16. The African nation is the top producer of platinum globally and the second in terms of palladium output.

Paired with a 93 percent shutdown of all US automotive production, the South African lockdown and auto sector woes will be headwinds for PGMs into the second quarter of the year.

To help investors make sense of the current uncertainty in the market, the Investing News Network has gathered a list of individual responses to the coronavirus from PGMs miners and explorers.

All news and data were current as of April 1, 2020. This article will be updated as new information becomes available — if you know of a PGMs company that has issued a response to COVID-19 but is not listed, please email editorial@investingnews.com.

PGMs and COVID-19: INN coverage

• WPIC: Platinum to Move on Increased Investor Interest
• VIDEO — Randy Smallwood: We Don’t See an End to Palladium’s Outperformance
• Platinum, Palladium Drop Over 40 Percent as COVID-19 Reverses Gains

PGMs and COVID-19: Producing companies

Impala Platinum (Implats) (OTCQX:IMPUY,JSE:IMP) — Operating in South Africa, Zimbabwe and Canada, Implats is a leading producer of both platinum and palladium.

In response to the COVID-19 outbreak, Implats has issued several statements and has created a webpage where all its topical resources are catalogued.

As a result of the nationwide lockdown, the global PGMs miner has put its South African operations — Impala Rustenburg, Marula and Impala Refining Services — on care and maintenance.

A 21 day national lockdown in Zimbabwe went into effect on March 30, prompting the company to apply for a special exemption with the government to continue operations with heightened safety regulations.

Implats plans to continue to pay employees over the three week period and has issued force majeure notices to contractors and consultants.

“With respect to offtake agreements, deliveries from all parties to the smelter were suspended on 24 March 2020 to enable the smelting operations to prepare for an orderly shutdown,” reads its statement. “With respect to customer supply contracts, deliveries can resume once the force majeure is lifted, provided delivery logistics permit.”

Anglo American Platinum (Amplats) (LSE:AAL,OTC Pink:AGPPF) — Mining major Amplats also has several operations in South Africa that have been impacted by the 21 day lockdown.

As of March 27, Amplats was in the process of ramping down its underground mining operations as it moved its Amandelbult mine, the Modikwa joint venture and the Kroondal joint venture, as well as the Mortimer smelter and Waterval smelter, into care and maintenance.

In early March, an explosion at the Watervale smelter prompted the PGMs miner to issue a force majeure announcement of its own, noting that it would be unable to meet its previous guidance.

Repairs where already underway at both Phase A and Phase B of the smelter before the COVID-19 pandemic forced South Africa into lockdown.

Amplats expects the repairs to Phase B to be completed near the end of May. The company has committed to paying all employees and said it will be maintaining community ties and programs during the three week country closure.

Sibanye-Stillwater (NYSE:SBGL) — Precious metals producer Sibanye-Stillwater also operates globally, with five PGMs projects in South Africa.

In compliance with the South African lockdown, Sibanye issued a press release on March 25 outlining plans to but both its PGMs and gold operations in the country on care and maintenance.

The company announcement goes on to note how the production halt could impact longer-term output.

“This suspension of operations will adversely impact on production at the SA mines and shareholders are therefore cautioned that production for 2020 may differ from previous guidance,” it reads. “Further detail will be provided once there is greater clarity on the possible production impact.”

Sibanye also has a webpage dedicated to COVID-19 updates and coverage.

Eastern Platinum (Eastplats) (TSX:ELR,OTC Pink:ELRFF) — Eastplats is another South Africa-focused platinum miner with projects in the prolific Bushveld Complex.

The company will temporarily close all operations in the country, save for some care and maintenance protocols described in a special exemption application it has filed with South African officials.

In addition to the shuttering, Eastplats has also conducted a risk assessment review and established new procedures around safety and community engagement.

African Rainbow Minerals (OTC Pink:AFBOF,JSE:ARI) — Diversified miner African Rainbow Minerals will also comply with the South African lockdown, putting its Two River platinum project, as well as several other resource projects, into temporary care and maintenance.

African Rainbow has also ramped up hygiene and health provisions across its divisions.

Implats’ decision to close its smelter will also impact African Rainbow, according to a company release.

“Two Rivers mine received notice of force majeure from Impala,” it states. “In terms of this notice, Impala indicated that for the duration of the lockdown period it will not be able to receive concentrate in terms of the agreement whereof Impala purchases concentrate as delivered by Two Rivers mine.”

African Rainbow has also partnered with other South African stakeholders, including the Motsepe Foundation, to create $1 billion rand fund to help the country deal with the effects of the coronavirus.

PGMs and COVID-19: Junior companies

Palladium One (TSXV:PDM,OTC Pink:NKORF) — Explorer Palladium One is currently developing the LK project in Finland, as well as the Tyko nickel project in Ontario.

In mid-March, Palladium One concluded its Finnish drill program and repatriated its Canadian team in compliance with a directive from the Canadian government for all citizens abroad to return home.

After arriving, all staff underwent a 14 day self-isolation period in adherence with government orders.

“The COVID-19 pandemic and it’s repercussions are continuing to evolve. The duration of capital market volatility is unclear. Suspending our exploration program early allows the Company to maintain a robust liquidity position,”  Derrick Weyrauch, president and CEO, wrote in the announcement.

“We will continue to monitor the situation and plan to resume the exploration program when appropriate.”

Grid Metals (TSXV:GRDM,OTC Pink:MSMGF) — North America-focused junior Grid Metals is developing the East Bull property near Sudbury, Ontario.

At present, a magnetotelluric survey is being conducted at East Bull and the company expects the work to be completed; however, it did note the uncertainty that abounds as a result to COVID-19.

“Grid Metals is carefully evaluating the potential risks of the current COVID-19 pandemic to its staff and contractors,” reads a release. “In light of the fluid nature of events the company would like to note that there is no certainty that the current exploration activities will be completed without interruption.”

New Age Metals (TSXV:NAM,OTCQB:NMTLF) — In a March 26 update, New Age Metals noted that it plans to continue exploration of its River Valley deposit near Sudbury with enhanced safety measures.

“This drill program is the first phase of our 2020 exploration and development program and will run through April. The company continues to monitor the COVID-19 pandemic and is evaluating the potential risks to our staff and contractors,” the press release reads.

New Age also noted that the unpredictability associated with the pandemic could delay exploration.

More COVID-19 coverage from INN

Click the links below for more of INN’s commodity-specific coverage of COVID-19:

• Gold and COVID-19: Who’s Reacting and How?
• Silver and COVID-19: Who’s Reacting and How?
• Copper and COVID-19: Who’s Reacting and How?
• Zinc and COVID-19: Who’s Reacting and How?
• Lithium and COVID-19: Who’s Reacting and How?
• Cobalt and COVID-19: Who’s Reacting and How?
• Uranium and COVID-19: Who’s Reacting and How?
• Diamonds and COVID-19: Who’s Reacting and How?
• Potash and COVID-19: Who’s Reacting and How?

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.