South Africa Faces PGM Supply Deficit Amid High Prices and EV Market Dynamics
South Africa is facing a significant supply deficit in platinum group metals (PGMs), with prices surging past $1,400 per ounce due to a projected shortfall of 966,000 ounces by early 2025. This decline in PGM output, from 5.3 million ounces in 2006 to 3.9 million ounces in 2024, is exacerbated by insufficient investment and electricity shortages impacting mining operations. In response, the government has introduced a 150% tax incentive for electric vehicle and hydrogen production investments, aimed at supporting its automotive industry and employment.
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Platinum group metals (PGMs) represent South Africa's largest export, with over 80% of global platinum sourced from the country. In early 2025, platinum prices increased significantly, reaching over $1,400 per ounce, driven by a projected supply deficit of 966,000 ounces.
This trend is attributed to insufficient investment in new PGM production and the impact of electricity shortages on mining operations. The PGM output from South Africa has declined from 5.3 million ounces in 2006 to 3.9 million ounces in 2024.
While electric vehicles (EVs) are expected to reduce PGM demand, the current preference for hybrids is providing temporary support for the sector. South Africa has introduced a 150% tax incentive for EV and hydrogen production investments, effective March 2026, to bolster its automotive industry, which employs around 116,000 people and impacts many more in related sectors.
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