There is currently very little incentive for new entrants to the platinum industry due to the extended payback periods, which is positive for the current producers. There hasn’t been closures or consolidation in the industry yet, and this may be the next step before the industry recovers. Time will tell.

We believe South African platinum producers provide a compelling investment opportunity at current valuations.

The largest risks the industry faces are that platinum is substituted by other commodities and that autocatalysts are not used in vehicles.

The current economic climate and mining issues such as the recent strikes have also resulted in negative market sentiment and reduced profitability. As often happens, bad news creates opportunities for the patient investor, and at current valuations we believe the South African platinum producers provide a compelling investment opportunity.