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For the first time since 2018, palladium prices are approaching parity with platinum, a sign of just how far the once red-hot metal has fallen. But beneath the surface, the palladium market is flashing warning signs—chief among them, the mounting stress at the Stillwater mine in Montana, the largest source of primary palladium in the United States.
Stillwater, which supplies nearly 80% of U.S. palladium production is the world’s highest-grade platinum group metal (PGM) mines and is now operating at a loss. This is not just a local business issue—it’s a red flag for the global palladium market, indicating that current prices are well below the cost curve for primary producers.
Owned by Sibanye-Stillwater, the Stillwater complex includes two underground mines—Stillwater and East Boulder—tapping into the J-M Reef, a uniquely rich ore body boasting grades of over 21 g/tonne of palladium and platinum combined. The mine has historically been a success story, producing over 14 million ounces of PGMs since operations began in 1986.
But in 2023, Stillwater saw cost inflation of over 30% year-on-year, with profitability hanging by a thread even on an operating basis. Once stay-in-business capital (SIB) expenditure was accounted for, the mine posted losses. This trend has worsened in 2024 as palladium prices have dropped further, pushing Stillwater even deeper into negative cash flow territory which saw a loss of $394.4 million in the first half of 2024.
As of the end of 2024, Sibanye-Stillwater reported that its U.S. PGM operations, which include the Stillwater and East Boulder mines in Montana, achieved an all-in sustaining cost of approximately US$1,367 per 2E ounce (platinum and palladium combined)
This matters. Because unlike in Russia or South Africa—where palladium is largely a by-product of nickel and platinum mining—Stillwater is a primary palladium mine. If Stillwater can’t break even at current prices, it strongly suggests that the market price is unsustainably low.
Herein lies palladium’s peculiar dynamic. Around 90% of global palladium supply comes not from primary mines, but as a by-product of mining other metals:
In Russia, the world’s largest palladium producer, Norilsk Nickel extracts it as a by-product of large nickel and copper mines in Siberia. These sulfide ore deposits contain significant palladium, but production is driven by nickel and copper prices—not palladium. As a result, output remains steady even when palladium prices fall, and doesn’t increase much when they rise, making supply largely inelastic.
In Canada, palladium is mainly produced as a by-product from nickel-copper mining in regions like Sudbury and Raglan. These operations, run by companies like Vale and Glencore, prioritize base metals, with palladium recovered during smelting and refining. Like in Russia, supply is tied to nickel and copper output, not palladium prices, making it similarly unresponsive to market shifts.
In South Africa, palladium is recovered as a by-product of platinum mining, primarily from the Bushveld Complex. Producers like Anglo American Platinum and Impala Platinum target platinum, with palladium extracted during processing. Since mine plans are based on platinum economics, palladium output remains largely fixed regardless of its price, adding to global supply inelasticity.
Because these operations are not driven by palladium economics, they are insensitive to its price. Even if palladium prices surge, these producers won’t necessarily increase output unless the primary metals they target (nickel, copper, or platinum) also become more profitable.
This means palladium has an extremely inelastic supply curve. When demand increases—whether from industrial sectors like automotive catalysts or investor interest—supply can’t easily rise to meet it. There are no quick switches to turn on production, especially when new mining projects take years to develop.
This structure sets the stage for volatility. In bull markets, palladium prices can go parabolic, rising far above historical norms as demand outpaces supply. And because primary production like Stillwater is rare and currently uneconomical, the market has little room to adjust.
Scrap recycling offers a faster response, but even here there are constraints. Autocatalyst recyclers in the U.S. and China have reportedly been hoarding material, waiting for prices to rise before selling, which could further tighten supply in the short term.
Unlike other metals with more responsive supply chains, palladium’s reliance on by-product sourcing makes it susceptible to prolonged booms—and extended busts. When prices rise, there’s simply not enough incentive—or infrastructure—to deliver new supply quickly.
The Stillwater mine isn’t just an isolated operation; it’s a barometer for the health of the palladium industry. If the highest-grade primary palladium mine in the world—located in a politically stable region with advanced infrastructure—cannot break even, then the current palladium price is clearly unsustainable.
North American mines like Stillwater and Impala Canada are already taking steps to slash capital and operating costs, but this won’t be enough if prices stay depressed. In fact, the longer prices remain below sustainable levels, the more primary production will shut down, tightening future supply even further.
Meanwhile, the by-product producers in Russia, Canada, and South Africa are unlikely to pick up the slack—unless prices for nickel or platinum also rise dramatically. This means any spike in demand, whether driven by stricter emissions standards, a rebound in the auto sector, or investment flows, could trigger a violent rally in palladium, with little supply available to cap the surge.
The palladium market is at an inflection point. Stillwater’s financial distress is not just a warning sign—it’s evidence that prices are too low to sustain even the most efficient primary producers. And with global supply largely dictated by unrelated metals, the odds of a timely production response to any demand shock are slim.
In a world increasingly defined by supply constraints, palladium’s unique by-product status makes it vulnerable to explosive upside. If history is any guide, the current weakness in price may be setting the stage for the next great PGM rally—one driven not by speculation, but by the fundamental mismatch between a tight, inelastic supply base and the return of strong demand.
Investing in Platinum Group Metals
Platinum Group Metals should be something that all precious metal investors consider, especially when Gold prices are histrically high. They are excellent diversfiers and feature some of the rarest metals on the planet in investment form
