ROBOCASH : The ‘Terminator’ has surprising implications for SA’s platinum group metals industry

If the AI revolution triggers the “Rise of the Machines”, South Africa’s platinum group metals (PGM) industry will play a key role in the making of the “Terminator” like the one portrayed by Arnold Schwarzenegger on the sci-fi screen. The “skin” that coats humanoid robots requires platinum and it is one of the new sources of demand for PGMs that did not exist just a few years ago. “You need silicone for the skin of a robot and you need platinum to cure the silicone. The best-quality skin is produced from silicone which is cured by platinum,” Northam Platinum CEO Paul Dunne said during a media roundtable on 28 August after the company unveiled record results. And one of the most striking things about this state of affairs is that through chemical processes, the platinum that coats humanoid robots is consumed. This means it is unavailable for recycling as is the case when PGMs are used in emissions-capping catalytic converters – the major source of demand for the metals. And this in turn has implications for long-term supplies and demand that will ultimately underpin prices. For humanoid robot production 2025 was seen as the “genesis year”. According to Counterpoint Research, global humanoid robot installations reached 16,000 units in 2025 – marking the first year of commercialisation – with China unsurprisingly accounting for more than 80% of this total.Much of the focus regarding metals demand arising from the rise of the machines has been on copper. In a report early this year, S&P Global highlighted humanoid robots as an emerging new vector of demand for the red metal. “There is much variance in projections for their scale by 2040 – varying from tens of millions to hundreds of millions to a billion or more. Whatever the actual number, these humanoids will not just be wired – but heavily wired – with copper,” the report said.They will also be plated with platinum.The catalyst for PGM demand was the 1970 US Clean Air Act which required a sharp reduction in vehicle emissions. This in turn triggered a surge in demand for the PGMs needed for auto-catalysts. As battery electric vehicles (BEVs) – which require zero PGMs – gain traction, South African producers of the metals have been searching for new applications and markets for their product.For example, metals chemistry company Johnson Matthey and South African PGM producers Sibanye-Stillwater and Valterra Platinum are partnering to drive R&D in the lab and find new uses – and by extension new markets – for PGMs.Humanoid robots – if forecasts for their production and commercialisation play out – could potentially play the same role for PGM demand in coming decades that the Clean Air Act did in the 1970s. And South Africa’s PGMs no longer carry the taint of apartheid and the ruthless exploitation of a Black migrant labour force that made America’s air cleaner. New users, new marketsThe unfolding AI revolution is creating new uses and markets for PGMs on other fronts – good news for the domestic economy as South Africa accounts for about 70% of global supplies of the metals.“The increased propensity to store data... requires quite a bit of miniaturisation. And when you miniaturise conductors you need special metals,” Northam’s Dunne said. “In terms of data storage the surface of the disk which allows higher density of data storage, if it has ruthenium or platinum it makes the density of storage a lot better.” Then there is fibreglass which is used as as an insulating base in most electronic circuit boards. “If you have a very high-quality glass fibre, then the heat of that baseboard is better. And if you want to make a very high-quality glass fibre, you need to put the rhodium back,” Dunne said. About three years ago, Northam detected unusual spoor in the PGM markets and tracked it to a shift by Chinese manufacturers of fibreglass to reduce the rhodium content and boost the amount of platinum that comprised the key alloy used. The mix went from 80% platinum and 20% rhodium to 95% platinum and only 5% rhodium. The result was the collapse in the price of rhodium which at one point was the most expensive precious metal in history, fetching close to $30,000 an ounce. The surging need for data storage linked to AI data centres has now seen a return of rhodium in the alloy mix to its previous levels because the performance of the fibreglass was undermined by the shift to platinum. It all points to new sources of PGM demand that did not exist recently outside the realm of science fiction. “These are very special metals, and new applications continue to evolve,” Dunne said. And what about gold? It also has applications linked to AI, but demand on this front does not seem to be picking up steam.According to the World Gold Council’s latest Gold Demand Trends report, demand for gold related to technology fell 2% in the second quarter of this year from the previous quarter. “I’m not aware of any significant further demand for gold on the back of the AI boom,” Harmony Gold CEO Beyer Nel told Daily Maverick in an interview after the company unveiled an 87% surge in earnings. This may partly be explained by the same factor that saw Harmony’s earnings soar – the red-hot gold price makes the metal extremely costly for technological applications. But who knows, maybe some future owners of humanoid robots will want their Terminators to be gold plated. And if Madams in South Africa replace Eves with robots, at least some of the economic pain here will be muted by jobs and investment in the PGM sector. DM