Rhodium: Zim’s dark horse metal

By Ceteris Paribus

The price of  rhodium opened at US$19 450 an ounce on the global markets cementing its position as the world’s most expensive mineral. Having soared over 75% in 2021 — the highest gain any commodity has seen till now — to just below $20 000 an ounce, the metal is 10 times the price of gold, seven times the price of palladium, 15 times the price of platinum.

Remarkably, the metal has had a phenomenal price run since 2019. It moved up from below $3 000 in January 2019 to $17 000 by end of December 2020 before reaching a record high figure of US$29 800 in March 2021.

Background

In December 2015, in response to the devastating effects of global warming, 196 nations, and territories, met at a global summit in Paris. They all signed an international pact that would be known as The Paris Agreement — a landmark in the multilateral climate change process. Vital to the treaty was a goal to limit global warming to well below 20 Celsius by the end of the century. To achieve this, countries committed to significantly reduce carbon emissions through nationally determined targets.

To serve as examples: China plans to reduce carbon emissions per unit of its gross domestic product by 18% by 2025. Under a new law put in place by the EU parliament, the European countries will cut carbon emissions by at least 55% by 2030, using 1990 as a base.

What is rhodium?

According to moneymetals.com rhodium is a precious metal in the platinum group, which likens it to platinum and palladium. It is often found in platinum or nickel ores and sometimes as an alloy. Rhodium’s silvery appearance makes it popular for jewellery plating, especially for sterling silver. Rhodium acts as a catalyst in the automotive industry, where it functions as a catalytic converter, eliminating harmful emissions like carbon monoxide and creating less environmentally damaging gas.

Reason for its price surge?

The deficit in the rhodium market doubled last year as primary supplies contracted. According to marketwatch.com, one of the problems that industrial users and end-users face in sourcing rhodium is that the metal does not have a futures market and there are only a few exchanges that trade the element. Also vital to the matrix, it is supplied from South Africa, the largest producer, being affected due to Covid-19. Also, there has been virtually no investment in new mines in the past couple of decades.                    Who produces rhodium?

South Africa is the largest producer of rhodium, accounting for between 80-90% of the total global production at an expected production of 624 000 ounces in 2020 according to statista.com. Russia, which produces 65 000-68 000 ounces annually, is the second-largest producer, while the rest of the world makes up less than 70 000 ounces of the output. In 2021, the supply of rhodium in South Africa is expected to reach around 624 000 ounces.

Where does Zimbabwe fit in?

Zimbabwe is the world’s third-largest rhodium producer and is home to the world’s second-largest Platinum Group Metal deposits, behind South Africa. The richest region in the platinum group of metals of Zimbabwe is the 550-km-long Great Dyke. It represents 85% of platinum group metals resources in Zimbabwe, and thickness and metallurgical recoveries are higher than those in South Africa

Zimbabwe’s current major Platinum Group Metals production is linked to Johannesburg Stock Exchange-listed firms Anglo American Platinum (Amplats), Impala Platinum (Implats), and Sibanye Stillwater (Sibanye) which have interests in Zimbabwe through Impala Platinum’s Zimplats, Unki, a unit of Amplats and Mimosa.

The reliance on South Africa for the supply of the metal is unhealthy. While rhodium output is still low, there is much potential for exponential growth.

  • Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — ebenm@equityaxis.net