On back of soaring profits, Valterra Platinum sets its sights on AI

A hauling truck transports blasted ore at the Mogalakwena open-pit platinum mine, operated by Valterra Platinum, in Limpopo. Image credit: Reuters/Nqobile Dludla

Valterra, the world’s top platinum producer by value, reported headline earnings per share of R82.02 for the six months to 30 June, up from R4.73 a year earlier, driven by an 85% surge in metal prices, coupled with an 18% increase in sales volumes.

The future of PGMs, historically used mostly in catalytic converters to curb vehicle emissions, has been under threat as electric vehicles grow and do not require emissions control.

AI opens new growth route

This has forced Valterra and rivals to explore alternative industrial uses for the metals – and the recent massive growth in AI has opened a new growth route.

Valterra believes there is potential for future PGM demand of 10 million ounces annually in industrial applications, jewellery, the growth of hydrogen as a clean energy source, and AI technologies.

“There is about two million ounces of real demand which sits there today, that we’re actively working on with a high degree of confidence,” Miller told Reuters in an interview.

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“AI was probably not necessarily on our radar 24 months ago. But what we are seeing is that PGM demand in AI-related activities is, today, conservatively, we think, somewhere between 200,000 and 400,000 ounces of demand,” he added, referring to the huge growth in data centres required to process AI.

AI-driven PGM demand could grow by as much as five times by 2030, Miller said.

Global platinum supply, about seven million ounces this year, is forecast to be lower than demand for the fourth consecutive year.

PGMs have exceptional electrical, thermal and catalytic properties relevant to the AI sector, according to the World Platinum Investment Council.

Miller said PGMs could also substitute for about 10% of the gold currently used in electroplating and related electronic applications, potentially creating an additional one million ounces of PGM demand annually.

Valterra said it would pay an interim dividend of R57 per share, up from R2 a year earlier, returning R15.1bn to shareholders and representing a 70% payout ratio.