Palladium Production Companies With Strong Outlook Anglo Platinum AMS, Chinese demand

Platinum group metals which include palladium, platinum and rhodium have important auto (catalytic converters), jewelry (white gold plating) and industrial applications.  In recent months, people have raised concerns regarding supply since Russian company Norilsk is the world's leading producer of the white metal.  Add to that the potential for worker strikes in South Africa's platinum belt and you have a recipe for the perfect storm.  Europe is by far the biggest platinum group metals customer for both Norilsk (50% of sales) and Anglo Platinum (over 48% of sales).

Russian palladium shipments via Switzierland continue to decline.  

According to Barclays, the Palladium market will deliver a sizable deficit in 2014 which will lead to a higher bottom price.  Not only are Russian stockpiles dwindling but because it's Russia there are other geopolitical issues at play.  Will Russia limit the supply in order to use palladium as a tool to counter economic sanctions?

And don't forget about the China-effect:  Chinese demand for platinum continues to soar.  Recently, China became the world's largest consumer of platinum thanks in part to fragile European auto markets.

Norilsk Nickel NILSY i) world's number one nickel producer ahead of Vale, Jinchuan, Xstrata.  ii) leading producer of palladium.  production:  platinum:  651,000 ounces (vs 683).  palladium: 2661,000 ounces (vs 2732). revenue, percent of revenue: platinum:  $956 million  9.2%  (vs $1028m 9.0%), palladium:  $1,935m  18.6%  (vs $1722 15.1%).

Anglo Platinum AMS-JO i) low risk South African miner:  BRPM achieved 2 million fatality free shifts in April, a milestone.  Modikwa had no fatalities in 2013.  World's largest platinum producer (38%).  production: platinum: 2376331 oz  (up from 2391), palladium:  1556m (up from 1554m).  palladium output by quarter:  428 vs 413; 369 vs 392; 320 vs 356; 439 vs 403.  revenue six months 2013: platinum:  15398 (vs 11705) 63.3% (vs 59.9%).  palladium:  3868 million ounces (vs 3206m) 15.9% (vs 16.4%)

Stillwater Mining SWC - As of December 31, 2013 2p reserves: palladium 10.346 million ounces (+1.59m), platinum 2.873 million ounces (+0.207m). realized prices: palladium $641-> $721 platinum $1551-> $1481

Primary mine production (supply from metals recycling in brackets): palladium   404.2 (395.9)  223.9 (258.5), platinum 119.7 (117.8) 345.7 (154.9).  percent % of revenue: palladium 37.4% (45.4%), platinum 58.4% (50.0%).

Lonmin LNMIY - Fiscal year ends September 30.  i) platinum sales of 696,000 ounces exceeded guidance by +30,000 oz.  ii) three work related deaths.  iii) capex of $159 million iv) increase in reserves at Marikana +3 million ounces platinum group metals, gold up by 0.9 million ounces.  Production:  palladium 320,503 (331,601), platinum 709,029 (687,372).  percent of revenue: palladium  14.7%   13.1%, platinum  69.4% 65.9%

Aquarius AQP - Fiscal year ends June 30.  i) total revenue declined 24% to $371 million; net earnings amounted to a loss of $288 million or $0.6113 per share.. this despite total PGM production up 13% to 325,103 ounces.  Bulk of metals production comes from Kroondal - 100th oz per quarter for final 3 quarters of 2013. Joint parter at Platinum Mile (12,596 oz) is Anglo Platinum.

Palladium Production Leaders Record Lower Volumes, revenue by metal companies Norilsk, AngloPlatinum, Lonmin

Between 2003 and 2010 palladium prices averaged 20% to 25% the price of platinum before reaching today's high of around 40%.  There are many reasons for this
- Toyota using palladium in place of platinum in catalytic converters,
- Palladium was less affected by the problems in South Africa
- Lower Russian output.  The price ratio could increase even more in the future because supplies haven't been tight as compared to alternatives platinum and rhodium. 
- According to some analysts, there was a platinum overproduction of half a million ounces in 2012.

Norilsk Nickel nilsy is the world's largest nickel producer and ranks among the top five companies in terms of platinum reserves.  The company operates in Russia, Finland, Botswana, South Africa and Australia.  The Norilsk deposit in Russia was among the first exploited platinum deposits.

From January to September 2012 Norilsk produced 2.077 million ounces of palladium, down 1.2% from 2011.  Russia was the source of 96.1% or 1.996 million ounces.
In interim 2012 the company earned $1.481 billion (-22.0% from $1.818b) on revenues of $5.929 billion (-19.2% from $7.335 billion).  Revenue attributable to palladium:  1h2012 15.7% (1h2011 15.5%).

Anglo American Platinum pink:agppy - Palladium production down for the nine month period but up 4.3% in the 3rd quarter (376k oz -> 392k oz).  Sales of platinum group metals:  3275 million ounces (-7.45% from 3535m oz).
Prices achived:   Platinum $1513 (-14.8%), Palladium $637 (-17.4%), Rhodium $1304 (-39.3%), Nickel $17,159 (-30.1%).  Cash operating costs per ounce of platinum produced:  R14,976 +14.4%.  Unki production +20% year on year.  An illegal mine strike cost the company 2,000 oz of platinum output in the third quarter.
Biggest contributor to revenue is the Mogalakwena Mine.  Mogalakwena contributed 24.8% of six month revenue came from the mine (-8.6%).  9m2012:  $983,000 down from $1,038,000 in 2011.
% revenue from palladium:  16.4% down from 14.9% last year. 

Stillwater Mining Company nyse:swc, tsx:swc

• Has a three year agreement with General Motors Corporation for a monthly delivery of a fixed amount of platinum group metals (platinum, palladium, rhodium) which is set to expire at the end of 2013. 
• one year agreement with Tiffany & Co expires end of 2012.
• Supply agreement with Johnson Matthey.
• Year to year agreement with Ford Motor Company.
• No outstanding derivative contracts
• one of only two platinum/palladium companies based in North America (other one is Canadian mining company North American Palladium)

43% of total revenue comes from PGM recycling up from 37% last year.  Avg realized price in 3q2012 was $611/oz down -18.9% from $753 in 3q2011.  3q2012 palladium production:  97,500 ounces down -2.6% from 100,100 ounces in 3q2011.  94,100 ounces came from the Stillwater mine in Montana, down from 96.800 ounces in 2011.  Nine month palladium production:  294k oz -5.5%
% revenue from palladium:  46.9% down from 48.8%.

Lonmin lon:lmi
Fiscal year ends September 30. It's the 3rd largest producer of platinum in the world. All of its mines are located in the Bushveld Complex of South Africa. Production in the three months ended September 30, 2012 was down 45.7% due to a mine strike (-110,000 oz), however refined platinum was down only 20.8% due to stockpile usage.
9 months to Sept 2012: 216,974 oz -10.0%.
% revenue from palladium: 13.1% (15.6%). fiscal 2012
Fiscal year 2012 revenue: $1.614 billion -18.98% ($1.992b),
Total PGM sales: 1383.945 k ounces down -3.6% from 1435.929 koz the year before.