Economy / 20 August 2018, 5:00pm / Philippa Larkin
JOHANNESBURG - The platinum industry would not be feeling much “love” and be in a worse situation than currently had it not had the foresight 43 years ago to found Platinum Guild International in 1975, which promotes platinum’s use in jewellery to create demand.
With the platinum price at historical lows, the sector has seen an employment bloodbath, with jobs axed and mining shafts shut. Impala Platinum has been the latest company to announce it plans to cut 13000 jobs and restructure.
Platinum companies Anglo American Platinum, Impala Platinum, Lonmin, Sibanye-Stillwater, Northam Platinum and Royal Bafokeng fund the non-profit organisation.
On Friday platinum was quoted at $779.06 an ounce.
Huw Daniel, the chief executive of Platinum Guild International, based in Hong Kong, said in an interview that the organisation, with a staff of 50, was very conscious that the livelihood of mineworkers in South Africa also depended on jewellery sales.
Daniel said that the guild had a three-pronged approach to promote platinum jewellery sales.
“We work with consumers to create awareness, and to understand the unique characteristics of platinum. We work with manufacturers to look at design trends and education and we work with retailers on in-store selling. It’s a 360 degree strategy.”
Jewellery was the second biggest demand source for platinum after car catalysts and was expected to generated roughly 2.5million ounces (m/oz) of demand in 2017, down 2 percent year-on year, and about 2.5m/oz of demand this year, increasing 2 percent year-on-year.
World Platinum Investment Council data shows that total platinum demand is 7.8m/oz for 2017, mainly coming from three sources:
Automotive (3.4m/oz), growing at 7percent from 2013, although down by 3percent from 2016. Jewellery (2.5m/oz), down by 16percent from 2013 and -2percent from 2016.
He said jewellery demand recovered last year after a slippage in demand over the past four years.
Four years ago there was a slowdown in China precipitated by the government’s anti-corruption drive, which effected corporate gifting and dampened traffic into jewellery stores.
Gold volumes slid and platinum, which sells about 10percent of the volume of gold, was caught in the slump.
He said since then China was in transition from an export based economy to a consumer based economy, which long-term will benefit platinum jewellery sales.
The guild also adapted to the buying habits of the new millennial.
Daniel said the jewellery industry was caught on the back foot as regards millennials. “It was a painful transition,” he said. “Millennials have different tastes and needs. Only when a jewellery collection is properly developed for millennials it does very well.”
He said jewellery for the millennial was a more design focused piece.
“There is a story behind the design, and it is often branded jewellery, with a name and story that is relevant to millennials,” he said.
With a clever strategy, the guild came up with a narrative to consumers that has promoted platinum as a love metal.
Platinum Guild International said platinum in China had become more strongly associated with love than any other metal, 2.5 times more so than white gold.
This is similar to marketing by the diamond sector.
The diamond sector has had a lot of mileage and sales out of the slogan by South African gem firm De Beers that, “Diamonds are Forever”.
Diamonds became associated as the must-have engagement gem in a ring and created the perception that for love to be eternal, a women must have a diamond ring thus creating demand for the gem.