Is Platinum Paying Its Rent?

The paper will attempt to identify the threats, however obscure, that could confront the South African platinum industry. South Africa has the largest reserves of platinum group metals in the world, and is the largest producer of those metals. This situation is no different from that which existed in the gold sector fifty years ago. Since then South Africa?s share of world gold production has dwindled, and the gold mining industry has lost its dominance. Unlike gold, platinum has widespread use as an industrial commodity. Its investment value is a minor portion of its total value. It is therefore subject to different market forces. The sheer magnitude of the industry in South Africa obscures the fact that it is a wasting industry, and that South Africa exports almost all its production as a refined metal in the form of autocatalyst. Since Hotelling published his seminal work The economics of non-renewable resource in 1931,the science of mineral economics has developed exponentially. The paper will present a background of mineral economic theory and compare to this the development of the South African platinum industry. Of particular concern to a mineral exporting country is the question of mineral rent?its definition and employment. This will be the mail theme of the paper.