EDITOR: | November 18th, 2015 | 3 Comments

End of Russian palladium exports may result in world market shortage

| November 18, 2015 | 3 Comments
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palladiumRussia may significantly reduce exports of strategic rare earth elements to foreign markets during the next several years, despite the recently announced state plans for a significant expansion of their domestic production.

It is planned that at the initial stage such restrictions will apply to palladium, huge reserves of which were accumulated by the country during the Soviet era, which allowed Russia to become one of its world’s largest exporters of the metal in recent years.

In recent years exports of palladium from the reserves of Russian State Precious Metals and Gems Repository (Gokhran) has been varied in the range of 14-15 tonnes, however there is possibility that they might be completely stopped already starting from 2016.

The official volume of palladium reserves in Russia is a state secret. According to the British research company GFMS, during the period of 2005-2009 Russia exported in an average of 34 tonnes of palladium per year, while in recent years these figures have significantly declined.

The end of supplies may result in a sharp rise of prices for palladium in the global market and will lead to the fact that Russia will no longer have a major impact on the world palladium market.

The end of exports of Russian palladium may result in a shortage of the metal in the world market. At present palladium is mostly used in the production of  automotive catalysts, while its shortage may result in a significant increase of the costs of automakers.

During the Soviet times Russia had accumulated huge reserves of palladium, as it was a strategic metal that is used extensively in the military industry. However the collapse of the USSR resulted in a significant sell-outs of Russian palladium  stocks to abroad. This resulted in the change of balance of supply and demand in global markets and lead to a sharp decline of global prices for the metal. However, due to the reduction of supplies of Russian palladium in recent years prices for the metal have resumed their growth in the market. The situation is aggravated by the traditional instability in South Africa, the world’s second largest palladium exporter, which share is estimated at 35% in the overall structure of global palladium sales. The current instability is reflected by regular strikes at local palladium mines, which may pose a threat to the South African palladium production.

The majority of Russian palladium has been traditionally supplied to Western countries, while one of the reasons of the complete termination of supplies could be further tightening of sanctions against Russia.

Sharp reduction of Russian palladium supplies to the global market may result in a global shortage of the metal in the volume of 1.2 million ounces already in 2016.

Currently the bulk of Russian palladium production accounted for Norilsk Nickel, one of the world’s largest mining companies. The company’s annual palladium production is currently varied in the range of 2,53-2,55 million ounces and there is a possibility that it may significantly decline during the next several years.  At the same the volume of platinum production by Norilsk is currently estimated at 625,000-635,000 Oz. per year.

Currently Gokhran is a state storage of the Russian gold reserves and the reserves of precious metals and precious stones. It currently has the world’s largest collection of platinum nuggets.


Eugene Gerden

Editor:

Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>


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Comments

  • Jakob

    Dear Eugene,
    thank you for this interesting article. It would be great – if possible – if you could integrate the linked sources to your information and data in order to shed some more light on the clandestine Russian resource policy on certain high-tech metals. Russian sources are welcomed as well.
    Best regards.

    November 20, 2015 - 4:41 AM

  • Michael Schuss

    Palladium will be the story that comes out of nowhere in 2016. In 2000-01 it was the only positive story in the junior exploration game which was very much like the current market. Palladium is a thin trader and can move up or down very fast. Paper palladium is a dangerous game. In 2000 TOCOM defaulted on futures traders wanting delivery and Ford booked if I remember correctly a billion dollar hedge book loss

    November 22, 2015 - 6:53 PM

  • Jose Luis S Morales

    Our province, Romblon, Philippines, is now found to have an abundant palladium deposit, and as a local lawmaker, i would like to know whether palaladium mining is posing any danger in the environment or the seas? Many towns already voted not in favor with palaladium mining, without the benefit of being educated how it affects our environment, but I want proper education please. Thank you.

    May 27, 2016 - 7:20 AM

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