Russia is the world’s top producer of Palladium and the world’s second largest producer of Platinum. South Africa holds the number one producer spot for Platinum and the number two spot for Palladium. Both countries will be major beneficiaries of the current Russian aggression in Ukraine that is raising prices on the two key components of catalytic converters, jewelry and a host of other products.
Uncertainty surrounding the events unfolding in the Ukraine is rallying prices on most of the commodities Russia produces, but Palladium and Platinum prices rarely get the same headline treatment as, say, oil or natural gas. Consumers, however, will feel the pain of inflation when they buy jewelry or automobiles for some time to come, in no small part because of price increases in the two precious metals that are used mostly for industrial purposes.
Russia and its Oligarchs will benefit greatly from the current additional price rises, because it is unlikely the long term production or sale of either of the metals will be significantly disrupted by events in Ukraine. Even if economic sanctions and boycotts against Russia are implemented by the US, the EU, and their allies, there will still be plenty of buyers (think China) ready to scoop up the much needed materials for use in catalytic converters, medical supplies, electrical components, and, of course, jewelry.
Aside from jewelry, the things containing Palladium and Platinum are too vital to human and economic health to not produce; as such, buyers will pay whatever they must, and buy from whomever they must, in order to secure supplies. Russia will find plenty of willing buyers at some point, but South Africa will likely have new buyers competing for its production, buyers willing to sign long-term contracts for supply in order to secure supplies from a source viewed as more politically correct, and perhaps more stable in the long run, than those purchased from Russia.
High prices will eventually result in more supplies of the two precious metals, and other major producers like Zimbabwe and Canada will likely increase their rates of production over time and benefit greatly from the sustained and increasing demand for Platinum and Palladium as well.
In the end, regardless of how long Ukraine turmoil lasts, the overall production of Platinum and Palladium both inside and outside of Russia will increase from where it is now because high demand and high prices are always what incentivize more production of any commodity. Current producers of both metals will benefit greatly along the way, most especially South Africa and Russia.