Just a couple of years ago South Africa’s platinum sector was largely consigned, like so many autocatalysts in clunky old cars, to the investment junk heap. Around two-thirds of the shafts were loss-making and the companies were burning cash. Prices were depressed, power and wage costs were surging, and production was vulnerable to labour and social unrest.

But, from the junk heap, old stuff can be recycled anew. And so it is with the platinum sector in South Africa, which is by far the largest producer of the precious metal, sitting atop around 70% of known global reserves. Impala Platinum (Implats) is the latest platinum group metals (PGM) producer to report a head-spinning turnaround.

On Thursday 5 September, the company reported 2019 headline earnings of R3-billion versus a headline loss of R1.2-billion in the previous year. This comes weeks after Anglo American Platinum (Amplats) posted a more than doubling of interim earnings to R7.3-billion. Sibanye-Stillwater’s PGM operations are also generating cash, while Northam Platinum looks on the right track for profitable expansion.

In the case of Implats, the company said revenue improved 36% to R48.6-billion on the back of higher sales volumes and climbing prices for rhodium, palladium, iridium and ruthenium. Part of the PGM mix, these metals have benefited from a number of trends, including moves to diesel engines from gas or petrol. PGMs are used in autocatalytic converters which reduce harmful emissions. Palladium is used in gas, while rhodium, which has seen its price more than double to decade highs of over $5,000 an ounce this year, can bat for both sides. The weaker rand also helped lift Implats’ earnings, as it does for all producers in SA of commodities destined for export.

“While platinum pricing continues to struggle, its discount to both palladium and rhodium has continued to spur efforts to reconsider the mix of metals used in gasoline light-duty catalysis. As the world focuses on the challenges of decarbonisation, the opportunity presented by fuel cells and a hydrogen economy is gaining growing recognition,” Implats said.

The company has benefited on other fronts. There has been restructuring at its key Rustenburg operation and a pivot to mechanisation is taking place where geology allows, while productivity increases have helped contain costs.

Still, distinctly South African challenges remain. The company’s Marula operation on the restive north-eastern platinum belt, which looked set for closure at one time after a deal with tribal authorities triggered protests from local communities that felt excluded, remains a flashpoint.

“The operational performance for the year under review [at Marula] was marred by a particularly weak third quarter, during which a seven‐day community stoppage impacted both mined and milled volumes,” Implats said.

Wage negotiations with the militant Amcu union are also still in play, while rising profits and higher prices could be a spark for communities around its operations to demand more revenue or jobs. Policy uncertainty remains a perennial investor concern. Still, it is an impressive performance for a company that was deeply in the red for years. As the world’s top gun in platinum, it is surely good news for South Africa that the sector is making money again. BM