Is This $2 Billion Buy A Sign of Opportunity in Palladium?

Critical item for the global platinum-group metals market this week. Suggesting that big changes may be ahead for buying and pricing in this space.

Major Russian PGM miner Norilsk said in an interview that it is creating an investment fund to buy palladium. Looking to consolidate much of the world’s privately-held stock of the metal under one umbrella.

Norilsk’s head of strategic marketing, Anton Berlin, told Bloomberg that the planned palladium fund will be of significant scale. With managers looking to buy up to $2 billion worth of the metal.

Berlin said some of this supply will be bought from the Russian central bank. While the remainder will be purchased from hedge funds and other holders.

The plan looks to more than just pie-in-the-sky thinking. With Berlin saying that the fund has already secured $1.6 billion in loan funding with an “international bank” in order to make its palladium purchases.

Norilsk itself is planning to contribute $200 million to the fund — with the company’s billionaire CEO Vladimir Potanin also participating privately. Potanin also said that Russian business magnate Roman Abramovich may contribute.

The move would be an interesting one for the PGM market — with the stated aim being to bring more transparency to palladium stockpile levels. Currently, above-ground stocks have proved difficult to assess. Leading to uncertainty about he global supply and demand picture.

If Norilsk does succeed in bringing $2 billion worth of palladium under one roof, investors would likely have a much clearer idea of what’s going on with supply. Potentially revealing that things are tighter than expected in this market.

That’s exactly the sort of scenario Norilsk is anticipating. With the company telling Bloomberg that it expects to see PGM production from major mining centers like Africa decline over the coming years.

If such a scenario materializes, the formation of this palladium fund could turn out to be a pivotal moment for the PGM market. Perhaps signalling an opportunity in the making here.

Here’s to funding change,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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