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What does it mean for diesel vehicles, platinum and South Africa?
There exists the potential for modestly reduced platinum demand over 1-3 years if fewer small diesel vehicles are sold as platinum is a key component of the catalytic converter found in diesel vehicles.
We have over the past six months built up a large position in the underlying physical platinum metal itself. The rationale is pretty simple, at current prices, almost the entire South African platinum industry is generating negative cash flows after taking capital expenditure into account, a situation which is clearly not sustainable. At some point, either the Rand will have to weaken substantially further or the actual dollar-denominated price of platinum will have to improve.