Ecological Era Could Add Shine to Platinum’s Future

The Green Revolution spells big business for South Africa’s platinum industry, as the metal is a key weapon in the fight against smog and acid rain.

South Africa provides 80% of supplies to the Western world and will increase production of the metal, which is more valuable than gold, to meet rising demand in the 1990s.

Mining houses here are reluctant to detail their expansion plans, but some platinum analysts see output rising as much as 60% by the end of the century.

Several platinum producers said the higher output reflects rising demand from jewelers in Italy and especially in Japan, where the metal is preferred to gold as an ornament.

Platinum is also used in petroleum refining, in the production of high-octane, lead-free gasoline and in airliner air purifiers.

But producers say most of the sales growth will come from platinum’s use in catalytic converters--devices that reduce pollutants in automobile exhausts. The auto industry is the biggest user of the metal.

Some analysts worry about what they see as the metal’s over-reliance on the cyclic auto industry, but the overall mood is optimistic.

“There is strong demand and we expect that to prevail for the next few years,” said Don Ireland, managing director of Impala Platinum Holdings Ltd., South Africa’s second-biggest producer.

Legislation to control auto-exhaust pollutants “is geographically spreading--Mexico, South Korea, Japan, Australia. It’s tending to spread worldwide,” he said.

The price of platinum has fluctuated between $420 and $620 an ounce in the past three years. But it is sold to industrial users on long-term contracts to protect them against sharp price hikes.

New York metals dealer Ronald Tauber said at a platinum conference in Johannesburg in October that by the end of the century, the auto industry’s use of platinum may double.

“Politicians around the world now understand: They either will be actively promoting pollution restrictions, or they will be opposed by the majority of their electorates. . . . All of this is critical to the platinum market,” Tauber said.

Consumption by the car industry is expected to be reported at 9% higher for 1989 than in the year before, with 43% of the supply going to the West, according to estimates published by London-based precious metals traders Johnson Matthey.

The report estimates that demand for platinum from the European car industry surged more than 20% last year, spurred by European Community legislation to match U.S. laws to restrict small car emissions by 1993.