Platinum is expensive because it is rare to find and very costly to extract and refine, with most supply concentrated in deep, capital-intensive mines in a few countries and with rising demand from industrial uses and investors driving prices higher[4][1].
Essential context and supporting details
Geology and rarity
– Platinum occurs in low concentrations in ore and is far rarer in the Earth’s crust than gold or silver, so much larger volumes of rock must be moved and processed to recover small amounts of metal[4].
– The world’s production is concentrated: South Africa supplies the majority of mined platinum, with Russia the next largest producer, so disruptions in those countries significantly tighten global supply and raise costs[1][4].
Mining is capital and labor intensive
– Most platinum is produced from deep-level underground mines that require huge upfront capital to develop long shafts, ventilation, cooling and safety systems; these mines are expensive to build and maintain and cannot quickly increase output to meet rising demand[4].
– Operating costs are high because of labor, energy, and equipment needs; inflation in labor and power sector problems have been cited as drivers of higher production costs in major producing regions[1][4].
Technical complexity and low ore grades
– Platinum is often found in complex sulfide ores together with other platinum group metals and base metals, so concentrates require multiple, energy- and chemistry-intensive stages of milling, smelting and refining to separate and purify platinum to market grade, adding processing cost and time[4].
Supply-side risks and constraints
– Political, logistical and equipment-supply issues in key producing countries (for example, sanctions, withdrawal of Western suppliers, transport bottlenecks) have reduced output or slowed refiners, constraining supply and pushing prices up[4][1].
– Secondary supply (recycling from autocatalysts and jewelry) helps but cannot fully offset shortfalls from primary mining, and recycling volumes can vary with prices and technological recovery limits[4][5].
Demand pressures
– Industrial demand—especially for automotive catalytic converters, diesel and hybrid vehicle systems, and growing use in hydrogen fuel cells and other clean-energy technologies—has increased, creating structural demand that competes with investment demand[2][3].
– Investor interest and ETF positioning amplifies price moves when physical availability is tight; vaulted stocks have fallen, raising lease rates and making it costlier for fabricators to obtain metal quickly[4].
Market mechanics that amplify price
– When physical stocks held in vaults decline, borrowing or leasing costs for metal rise, which supports higher spot prices as buyers must pay more or prepay for supply[4].
– A relatively small change in supply or demand can have a large price effect because the overall market for platinum is modest in size compared with other commodities, making it more price sensitive to disruptions or speculative flows[4][8].
Examples from recent market developments
– Production constraints and underinvestment in South African operations, plus geopolitical risk affecting Russian flows, were cited as key reasons for a structural deficit and a sharp price rise in 2025–2026 forecasts[1][4].
– Analysts and market reports in 2025 noted big year-on-year price gains driven by scarcity from mining and refinery constraints alongside stronger demand from industry and investors[6][2][8].
Sources
https://www.streetwisereports.com/article/2025/12/15/platinums-impressive-ascent-could-continue-through-2026.html
https://www.imarcgroup.com/news/platinum-price-index
https://platinuminvestment.com/files/954835/WPIC_Platinum_Quarterly_Q3_2025.pdf
https://www.miningweekly.com/article/balanced-2026-platinum-market-forecast-dependent-on-global-trade-tension-let-up-2025-11-18
https://fortune.com/article/current-price-of-platinum-12-17-2025/
https://www.fitchratings.com/research/corporate-finance/fitch-ratings-raises-most-near-term-metals-mining-price-assumptions-04-12-2025