Anglo American to Spin Off Unit to Boost Platinum Demand

- May 16th, 2018

The top platinum producer is seeking to boost platinum demand by spinning out its internal venture capital unit to prompt investment in fuel-cell technology.

The world’s largest platinum producer, Anglo American (LSE:AAL), is seeking to boost platinum demand by spinning out its internal venture capital unit to prompt investment in fuel-cell technology, the company announced on Tuesday (May 15).

Chris Griffith, chief executive of Anglo American’s platinum division, stated that the spin-out will allow for access to outside investors while the company looks to take stakes in emerging hydrogen start-ups that could push the adoption of fuel cell cars above battery powered electric cars.

“It’s about growing demand,” Griffith said. “We believe we can do so much more with it with partners alongside us.”

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Platinum supply is currently experiencing a surplus, with the World Platinum Investment Council (WPIC) reporting that oversupply in the platinum market will be around 180,000 ounces for 2018, down from last year, but still above a previous forecast of 25,000 ounces.

By focusing on and spinning out Anglo American’s internal fund, the company hopes to create more demand for the precious metal while finding a home for its surplus.

Anglo American’s internal fund has made around US$80-million of investments over the past six years, including a Dutch hydrogen start-up, High-Yield Energy Technologies, last month.

Anglo American CEO Mark Cutifani said the company believes that, “on a longer term basis, hydrogen will play a much bigger role in the economy.”

Many other large platinum miners are following Anglo American’s lead by positioning themselves in a way that moves from combustion engines by betting on lithium and cobalt, which are needed for battery technology.

Anglo American sees fuel cells, which uses platinum as its stimulus, as a potentially notable source of demand growth, stating that demand for platinum in fuel cell electric cars could rise to 1 million ounces by 2030.

The company cited China as one of the biggest catalysts for fuel cells as hydrogen technology in trucks and buses is currently being promoted there.

“At the moment the big game in town is China,” Griffith noted.

Adding, “they’ve put in place very serious incentives. It’s just phenomenal.”

Anglo American’s platinum division provides the world with approximately 40 percent of all newly mined platinum. All of the company’s operations are located in the Bushveld complex in South Africa, with the exception of Unki mine on the Great Dyke formation in Zimbabwe.

Anglo America reported a 7 percent increase of platinum in Q1 2018, producing 614,000 ounces for the quarter.

As of 11:50 a.m. EST on Wednesday (May 16), platinum was down 1.01 percent, trading at US$886.00 per ounce.

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

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