Platinum Group Metals: Market Dynamics, Economic Value, and Environmental Impact

7/29/25

Almost everything you touch daily relies on one thing: platinum group metals (PGMs). From the chips that power your phone to the catalytic converter in your car, PGMs are essential for enabling a clean, modern world. Their unique chemical properties, such as corrosion resistance and stable electrical properties, make them irreplaceable. While we may not always be aware of it, our modern lifestyle would be impossible without these critical elements, PGMs.

Platinum group metals (PGMs)—including platinum (Pt), palladium (Pd), rhodium (Rh), ruthenium (Ru), iridium (Ir), and osmium (Os)—are among the rarest elements on Earth. They share similar physical and chemical characteristics, including high purity, elevated melting points, and strong catalytic and redox properties. PGMs are essential in a wide range of industrial applications, such as automobile emission control, clean energy technology, petrochemical processing, medical instruments, and electronic devices. Due to the geographically concentrated nature of PGM deposits, they are obtained through either primary production (deep underground mining) or secondary production (recycling).

The purpose of this paper is to provide a comprehensive overview of platinum group metals (PGMs) by examining the key market forces influencing production and consumption, the economic factors and risks associated with use, and the environmental impacts of PGM mining.

PGM Market

In 2023, the global platinum group metals market was valued at approximately USD 30.41 billion, with a projected compound annual growth rate (CAGR) of 4.6% from 2024 to 2030.

The majority of PGMs are produced in South Africa, Russia, Zimbabwe, and North America (Canada and the United States), with South Africa and Russia together accounting for over 80% of the global production. South Africa leads in platinum production, while Russia is the dominant producer of palladium.

PGMs Production by Country

With a highly concentrated market, producers play a critical role in the mining, extraction, processing, and global distribution of PGMs. Because PGM deposits are both geographically concentrated and located deep underground, the number of producers remains relatively limited.

PGMs: Producers, Location, Annual Production, & ASIC (2024)

Producer	Location	Annual Production (2024)	All-in sustaining costs (AISC) (2024)
Anglo-American Platinum	South Africa, Zimbabwe	Platinum: 1,122,000 oz Palladium: 887, 000 oz Rhodium: 141,000 oz	$986 USD / oz
Impala Platinum	South Africa, Zimbabwe, Canada	Platinum: 1,590,000 oz Palladium: 1,158,000 oz Rhodium: 190,000 oz	$1,491 USD / oz
Norilsk Nickel	Russia	Platinum: 667,000 oz Palladium: 2,762,000 oz	$816 USD / oz
Northam Platinum	South Africa	Platinum: 526,220 oz Palladium: 266,185 oz Rhodium: 90,049 oz Ruthenium: 162,158 oz Iridium: 34,303 oz	$1,181.49 USD / oz
Sibanye-Stillwater	South Africa, USA	Platinum: 1,089,955 oz Palladium: 548,651 oz Rhodium: 165,636 oz Ruthenium: 329,494 oz Iridium: 329,494 oz	$1,200 USD / oz

Commodity trading in the PGM market involves both physical and financial markets. Once PGMs are extracted from mines, they are sold to refiners, manufacturers, or industrial users, with pricing determined by spot market rates and long-term supply agreements. In the U.S., all unwrought and semi-manufactured forms of PGMs are imported duty-free. Beyond direct sales, PGMs are actively traded on commodities exchanges such as the New York Mercantile Exchange (NYMEX) and the London Platinum and Palladium Market (LPPM). These trading mechanisms play a vital role in promoting market transparency, setting industry standards, and ensuring responsible sourcing for ethical and effective international trade.

Primary Trading Venues & Focus Areas

London Platinum and Palladium Market (LPPM)	Distribution, Sourcing, Sponge Accreditation	Main global marketplace
New York Mercantile Exchange (NYMEX)	Futures contracts	Exchanges: CME, CBOT, NYMEX, COMEX
Tokyo Commodity Exchange (TOCOM)	Platinum Trading
South African Futures Exchange (JSE)	PGMs contracts	Contracts, Margin Administration, Futures Close-Out, Clearing and Settlement

Economics

The key cost metric for terrestrial mines is the all-in sustaining cost (AISC) per ounce of PGM produced. To remain profitable, the AISC must be below the current or anticipated spot price of the PGM. If the AISC exceeds the market value of the commodity, the mine becomes unprofitable.

In 2023, platinum prices ranged between $946 and $970 per ounce. Zimbabwe's Great Dyke reported an ASIC of $1,035 per ounce, while its competitor, Anglo American Platinum, had a slightly lower AISC of $957 per ounce. With such razor-thin margins, profitability dropped to as low as 6%. Even small macroeconomic shifts can turn a potentially profitable venture into a loss.

In 2021, the primary supply of platinum group metals (PGMs) totaled 422.9 metric tons, meeting only 69% of global demand. By 2024, the global demand for PGMs in industrial applications increased by an additional 2%. Despite global reserves of PGMs being estimated at over 3.5 billion ounces, the global supply has continued to struggle to meet rising demand.

Automotive demand is the primary driver of platinum consumption, accounting for 40% of annual global demand. In 2019, 34% of annual platinum production was used to manufacture catalytic converters. By 2023, platinum demand in the automotive sector increased by 16%. This growth has occurred despite the rising market share of battery electric vehicles (BEVs), which represented 8.9% of the automotive industry in 2024.

Although BEVs do not use PGMs, hybrid electric vehicles (HEVs) and fuel cell electric vehicles (FCEVs) do. Demand for PGMs in HEVs, FCEVs, and gasoline vehicles continues to rise, driven by stricter emissions standards and the increased adoption of hybrid vehicles.

These charts illustrate the demand for platinum, palladium, rhodium, and iridium across various industry applications, including automotive, chemical, and electrical.

The annual supply of PGMs continues to fall significantly short of global consumption, creating a widening imbalance between supply and demand. The platinum market is projected to remain in deficit through 2029, underscoring both instability and investment opportunities, while posing challenges for industries that rely heavily on PGMs. This ongoing market shift is driven by persistent supply deficits, especially platinum, workforce restructuring among major producers, evolving demand due to the rise of electric vehicles, and growing interest in hydrogen-related technologies.

The graph below illustrates this trend, showing that the available platinum supply consistently falls short of demand, further highlighting the persistent gap between supply and demand.

Platinum Supply & Demand: Deficit VS. Surplus

As demand increases, concerns about price volatility and the long-term sustainability of production are growing. In 2024, the estimated average annual price for iridium rose by 3%, while prices for rhodium (-31%), palladium (-27%), and ruthenium (-6%) declined. For instance, PGM production in both Russia and South Africa has decreased due to factors such as falling prices, the high costs of deep-level mining, labor disputes, and ongoing electricity supply disruptions. Additionally, the decreasing concentration of PGMs in the Earth's crust, along with their uneven global distribution, poses risks of resource depletion and supply instability. With expected increases in U.S. tariffs, many companies are proactively investing in more resilient supply chains. This underscores the need for more efficient mining techniques, alternative sourcing strategies, and advancements in PGM recycling. At the same time, the emerging hydrogen economy presents new growth opportunities, particularly for platinum. While overall demand is expected to remain stable through 2030, advances in recycling technology may help mitigate potential supply constraints and maintain market balance.

Digging Deeper: Solution or Problem?

Ore grades vary with depth, and with increased depth comes a significant limitation: temperature. In South African platinum mines, for instance, the rock temperature can reach 50°C to 60°C (122°F to 140°F) at depths of 1,800 meters below the surface. This is due to the natural geothermal gradient, which typically increases by about 25°C to 30°C for every kilometer of depth in the Earth's crust. At such extreme depths, advanced cooling systems, such as refrigeration plants and chilled air, are essential to maintain safe working conditions for both workers and machinery. Without these cooling measures, the high temperatures would render mining operations unfeasible.

The concentration of ore, or the amount of PGMs per ton, is a critical factor in determining the feasibility of mining operations. A key metric for economic viability is the ‘cutoff grade’, the minimum grams per tonne (g/t) of PGMs required to justify extraction costs. Typically, a cutoff grade of around 2 g/t is considered the standard for PGM mines, reflecting the geological conditions and processing methods necessary for profitable mining. When the ore grade falls below this threshold, it becomes economically unfeasible to justify the costs of extraction and processing.

As near-surface PGM deposits are depleted, mines will be forced to dig deeper into the Earth's crust. Recent studies indicate significant quantities of PGM deposits extending to at least 2 kilometers deep. However, mining at these depths will be considerably more expensive, as the cost of extraction increases exponentially with depth. For example, sinking a shaft, one of the key stages in current terrestrial mining, can cost between $50 million and $100 million and take 3 to 5 years to complete. Once mining reaches depths beyond 1.5 kilometers, the cost of production often exceeds the spot price of the metal, presenting economic challenges. To make these deep mines profitable without causing a sharp rise in PGM prices, new underground mining methods will need to be developed.

In this context, innovative mining techniques are crucial for maintaining profitability and supporting the sustainable production of PGMs. With narrow profit margins and rising energy, labor, and regulatory costs, even small market fluctuations can have significant financial consequences for mines, producers, and consumers.

Environmental Impact

Reiterating the principles of the United Nation’s Universal Declaration of Human Rights, the UN’s Sustainable Development Goals (SDGs) form a framework of 17 interconnected objectives with 169 associated targets. These goals aim to promote the environmental, social, and economic well-being of the planet and its people. Widely regarded as an international roadmap for sustainable development, the SDGs were established to protect life on Earth by addressing issues such as trade, systemic challenges, capacity-building, and environmental monitoring.

For example, goal 7 focuses on affordable and sustainable energy. Goal 13 emphasizes climate action through increased energy efficiency and access. Goal 15 aims to “protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss".

Complementing the UN’s Sustainable Development Goals (SDGs) is the IRMA Standard for Responsible Mining, a regulatory framework that defines best practices for industrial-scale mining with a focus on environmental responsibility. This standard aims to minimize environmental damage and biodiversity loss by promoting responsible mining operations. Under the IRMA framework, environmental responsibility encompasses the management of waste and materials, water use, air quality, greenhouse gas emissions, biodiversity, and the handling of hazardous substances such as cyanide and mercury.

These goals have significant implications for PGM mining, particularly in shaping environmental stewardship. Environmental regulations inspired by the SDGs influence policies on climate change, water and waste management, and biodiversity conservation. In response, mining operations are adopting measures to reduce greenhouse gas emissions by improving energy efficiency and incorporating renewable energy sources. According to the International Energy Agency (IEA), stricter global emission standards, such as the Euro standards in Europe and the China standards, have led to an increased use of PGMs, particularly palladium and platinum, in cleaner automotive technologies. For example, over the past five years, the amount of palladium used per gram of catalyst has increased by more than 25%.

The majority of the electrical energy used in PGM production in South Africa is derived from coal, resulting in high CO₂ emissions. A major contributor to these greenhouse gas emissions is the final stage of mineral processing, leaching, which requires the ore to be crushed into extremely fine particles. This process typically involves the use of large, diesel-powered machinery, resulting in high energy consumption.

Carbon emissions represent just one aspect of the environmental footprint of PGM mining. Water usage is another critical concern. The extraction and processing of PGMs require vast amounts of water, approximately 743 cubic meters per kilogram of metal, totaling nearly 467 million cubic meters annually. This is equivalent to around 185,000 Olympic-sized swimming pools. Additionally, the water used in the extraction process often becomes contaminated with hazardous substances, posing significant environmental risks if not properly treated and managed.

Recycling PGMs from waste materials, also known as secondary resources, has proven to be an effective way to supplement supply, especially in regions with limited natural reserves. In 2017, open-loop recycling contributed 24% of the annual platinum supply, 29% of the palladium supply, and 29% of the rhodium supply. In 2024, over 4,232,875 ounces of palladium and platinum were recovered globally from scrap materials and outdated automobile catalytic converters. Over the past decade, more than 150 metric tons of PGMs have been recycled annually, with over 75% coming from automotive catalytic converters. While recycling plays a significant role in reducing environmental waste and easing supply shortages, the total volume of PGMs recovered, both from natural and secondary sources, still falls short of meeting global demand.

Supply-Management-Recycling (SMR) Chain

The natural distribution of PGM reserves is both scarce and geographically concentrated, creating additional challenges such as electricity shortages, high mining costs, and increased environmental stress in extraction regions. Although mining companies have launched sustainability initiatives, such as water recycling, transitioning to cleaner energy sources, and land rehabilitation, these efforts are often constrained by the high costs and limited profitability inherent to the industry.