As the current metal of choice for wedding rings and a main component of catalytic converters for more environmentally friendly cars, demand for platinum is on the up. There has been a supply deficit for five years with Russia, the world's second-largest producer, holding on to supplies.
The metal consequently proved more resilient than most others to May's commodities market weakness.
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What does this mean for platinum miners? Lonmin (LMI), the third-largest producer, deserves to trade on a higher rating, as it merits being valued more like a gold producer than a diversified miner, says O'Dwyer.
The group also uses less labour-intensive mechanisation than competitors and aims for labour to represent no more than 40% of its total costs by 2010, against 60% currently. Morgan Stanley reckons that £42 a share is a realistic price target for the firm; a gain of more than 40% from current levels. An even healthier potential upside of 60% is possible for mid-sized operator Aquarius Platinum (AQP), which is regarded as having better growth potential than many of its larger rivals.
by Graham Buck
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