Platinum producers not too keen on ETF

By Justin Brown

Johannesburg - The world's largest platinum producers yesterday gave the thumbs down to talk of an exchange-traded fund (ETF) due to the low liquidity in the platinum market and fears that an ETF could overheat an already tight global market for platinum.

Over the past two years, investors have poured $10 billion (R72 billion) into gold ETFs, including the ETF listed on the JSE.

There is also a silver ETF listed in the US.

Anglo Platinum's commercial director, Sandy Wood, said the group was not keen for there to be an ETF launched and such a vehicle would cause platinum stock to be locked up.

The cost of platinum has hit a record high on rumours that a market is to be opened up allowing traders to speculate on the price of the precious metal.

Prices touched $1,402.50 per troy ounce on the London market, before falling back to $1,390. The previous record of $1,340 was set in May.

Platinum is a key component for catalytic converters in car engines.

World demand is currently outstripping supply and prices have risen 50% in the past year alone.

This is largely due to it being a very limited resource which has an industrial application.

Industrial downside

Russia and South Africa are the two main producers of platinum and its use in catalytic conversions is growing as pollution rules are toughened.