What is Iridium?
Not the most accessible of elements, Iridium is a metal found in meteorites and magma deep in Earth’s crust and miners can obtain it as a derivative of platinum and palladium mining. It is shiny and does not oxidise in steel and is known to be harder than solid steel. Essentially, it is a hard, heavy, very rare metal and is steadily gaining popularity with a 131% year-to-date stock surge, overtaking Bitcoin’s 81% gain.
Why the popularity? Iridium is forty (40) times more rare than gold and is useful in several industries. At present, Iridium is sitting at $6000 per ounce, to put it into perspective, today gold is sitting at around $1730 per ounce. Iridium has been a steady riser on the market for years as in 2016, the metal was worth $500 per ounce. Its value comes from the fact that Iridium is vital in many industries.
Most specifically, due to iridium’s strength and extreme melting point, it is an important element in creating spark plugs. Iridium spark plugs last 25% longer than platinum spark plugs. Besides, as it can withstand extreme heat, it is used in the crystal making process. Perhaps the element’s greatest use is that it is used as a compound in electrolysis to split water into hydrogen and oxygen. This is important as it is hoped that “green hydrogen” can be a clean solution to the global climate change crisis.
Obtaining Iridium
80-85% of the world’s iridium is produced in South Africa; the Anglo American Platinum plant in the region is the major global producer. However, due to unforeseen circumstances, the plant has had to shut down and rebuild, which in turn has led to a global iridium supply shortage at the crucial time of growth in demand for the element.
Iridium has the longest processing time of all the platinum group metals (PGMs), the plants’ closure will therefore greatly impact supply. Through basic economics, this lack of supply and increase in demand will, however, ensure that the metal’s high prices are sustained.
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The strong demand for iridium is based on an expected economic rebound and the expectancy that the demand for hydrogen, as mentioned above, will increase the need for iridium. However, the market for the metal is small with annual production amounting to around only 250,000 ounces. To put this into perspective, the annual output for platinum is close to 8 million ounces.
The metal has piqued the interest of investors, however, the demand is dominated by industrial users with only a few major investors, who go straight to the producers when trading. It is difficult for anyone else to bet on iridium as it is not traded on a bourse or through exchange-traded funds. Besides, its rarity has forced miners to consider the metal a by-product rather than a focus, and production is slow and difficult.
The forecast on iridium
The market for iridium is illiquid meaning the prices will shoot up when there are no sellers. It can be deduced from the rarity and scarce produce of the metal that the cost will remain steadily high in the foreseeable future.
SFA Oxford is the world’s leading authority on PGMs. They predict that the minor PGMs ruthenium and iridium will be at the forefront in terms of average price performance in 2022. SFA Oxford’s executive chairman Stephen Forrest has stated that the demand for other PGMs such as platinum and palladium will likely decrease as people are more inclined to buy electric vehicles in line with environmental awareness.
This would mean that relative to the overall basket, the minor metals iridium and ruthenium will continue to outperform in terms of prices.
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