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Commodity
PLATINUM
Description | Overview | History | Platinum producing countries  | Major trading centers
Description


Platinum is a silvery white colored, principal metal element of a six metal group in the periodic table, with the atomic number 78 and symbol ‘Pt’. It falls in the category of precious metals with gold and silver but it leaves even these like metals behind in the importance context. Platinum has properties similar to those of other precious metals such as it is malleable, ductile but as a matter of fact it is heavier than those metals. That makes it harder and makes it difficult to alloy with any other metal. Also it has a higher melting point and is corrosion resistant too.

Platinum is primarily used to make jewelry but is also used in manufacturing laboratory equipment, electrical contacts, dentistry equipments, and other devices.

Overview


Platinum is an extremely rare metal and that makes it even more precious than gold or silver. The percentage of platinum under the earth’s crust is just a mere 5 parts per billion. It possesses all the characteristics that make it a very useful industrial metal and the fact that this is a very costly metal becomes irrelevant when approximately 50% of the platinum produced annually is used for industrial purposes. Platinum is so heavier and denser than other metals that it is said that only one cubic foot of this metal weighs as much as over half a ton! Platinum is the chief metal of a group of metals that include palladium, rhodium, rhodium, osmium and iridium. Economies of many developed and developing nations are dependent on this metal and hence it can be considered a very fruitful form of investment.

Basically, platinum deposits in its true form are concentrated only in two areas on earth, South Africa and Russia. At other places of the world it is produced as a by-product in the production of other metals. The world production of platinum is over 6 million troy ounces, which is around 7% of the world production of gold and just 1% of the world production of silver. This depicts the level of scarcity of this metal. South Africa is leader in the mine production of platinum. This multi purpose metal is vastly used throughout the globe in various industries. The demand for the metal in 2004 figured around 6.58 million ounces. The main demand for consumption of platinum arises from the following industries

  • Jewelry (accounting up to 51%)

  • Automotive (29%)
  • Petroleum-refining (13%)
  • Computer (7%)
  • Glass
  • Electrical
  • Chemical

Platinum is required for manufacturing around 20% of the total consumer goods produced. The countries that are the major consumers of platinum are

  • Japan
  • United States
  • European Union
  • China

Japan consumes almost 85% of the platinum jewelry that is produced in the world. The trend of platinum consumption is getting popular among the developing countries of the world and is rising sharply.

Due to a very small quantity present on the earth and also due to the ever-increasing demand of the metal, the prices of platinum are highly volatile. Even a small mismatch in the demand and supply scenario can bring about a huge fall or rise in the prices of platinum. That’s why it is considered to be a very sensitive mode of investment. This fact attracts the investors towards it. However, the London physical market provides the world with the basic reference price i.e. London fix for platinum and is considered as an international benchmark. The factors that govern the prices of platinum are

  • Policies in South Africa and Russia
  • Size of Russian stockpile
  • Economic situation in the consuming g countries like Japan, USA and European Union
  • Fluctuations in the prices of other precious metals
History

Platinum has been called a new metal as compared to gold and silver. But it has a very long and amazing history behind it beginning even before when human being itself was not developed! Some researches conclude that platinum was not present below the earth’s crust and not the native of this planet when the earth came into existence. Platinum was incidentally brought to earth by a meteorite around 2 billion years ago. That meteorite collided with the earth (around North America) and as they are generally rich in platinum, the new metal was brought to our planet in the pre-dinosaurian times.

When the species of human came into existence and developed in the valley civilizations, they, of coarse, didn’t know about the alien metal present on earth. With time the native Americans came to know about this metal and started using it even before pre-Columbian times. In around 1200 BC, the Egyptians used to import gold mixed with platinum from the ancient kingdom of Nubia for making jewelry and ornaments but those people didn’t know the presence of platinum in that metal mix. The native South Americans also used the metal mix for the same purpose in around 100BC but right after that time this precious metal was lost from the hands of mankind! It never appeared for almost two thousand years. When America was found, the Europeans colonists re-discovered this metal again in the 16th century and they were the Spanish conquistadors who named it “Platina” meaning little silver.

The people in that time valued gold more than all metals. They never even understood the value of gold and treated as an inferior metal or an unwanted impurity. An interesting fact is that the people who mined silver and gold used to discard platinum and throw it in the rivers of Ecuador “to ripen”! This made this metal to vanish again from this world thirsty of gold.

In the 18th century, platinum was re-re-discovered by a European astronomer, Antonio de Ulloa during the expedition of Peru under the reign of King Philip V. the people now recognized the importance of this element and it started coming to Europe and became popular among the alchemy related researchers. In 1751, it was declared as a precious metal among gold and silver and soon it became the metal of the kings. In 1780, King Louis XVI declared it as the only metal fit for kings. This incident started a kind of contest between the royal families of the world to get close to platinum. Till today, it has maintained its reputation of being the “most precious” among the other precious metals.

Platinum producing countries


Platinum in its original form is found only in two places on the earth i.e. South Africa and Russia, as the metal is not distributed evenly around the earth. At rest of places, platinum is found a by-product of the ores of other metals like rhodium, nickel, iridium, etc. The presence of this metal under the earth surface is just 5 parts per billion that makes it extremely scarce.  The countries that are among the topmost platinum producing countries of the world with their production figures are

  • South Africa (5030000 ounces)

  • Russia (850000 ounces)

  • United States of America (385000 ounces)

  • Zimbabwe

  • Canada

Supply of platinum from South Africa is the largest that accounts to around 80% of the world’s total supply. It is also considered that South Africa is controlling more platinum reserves than even the Arab nations control the reserves of crude oil. Mining in the country is done on industrial contract basis. Russia holds the share of around 11% of the world’s supply of platinum followed by USA with 6% share. The world production of this metal weighs around 6 million troy ounces a year. It is too low as compared to other precious metals. Also, platinum doesn’t have large stockpiles like the other precious metals. That is why; the world demand often exceeds the total production of this metal. One interesting fact claims that the steel production in United States in 1 day is larger than the world’s platinum production in a year!

The production of platinum from its ore is also a complex and a difficult task. Approximately 10 tons of raw ore is required to produce a mere 1-ounce of platinum. Also, it needs six months to get extracted. Over 90% of the platinum production is wholly and solely dependent on four major platinum producing mines

  • Rustenburg (South Africa)

  • Impala (South Africa)

  • Lonrho (South Africa)

  • Norlisk (Siberia)

Major trading centers of platinum


The major trading centers where platinum is traded are

  • New York Mercantile Exchange (NYMEX)

  • Tokyo Commodity Exchange (TOCOM)

  • Mid America Commodity Exchange (MIDAM)

The main physical market indulging in the trade of platinum is the London Platinum and Palladium market. This is market, which provides the world with the ‘London fix’ price that is considered as a benchmark in detecting world platinum prices.

 

 
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