JOHANNESBURG (miningweekly.com) – The shareholders of Anglo American Platinum (Amplats) have been advised that the earnings of the platinum group metals (PGMs) mining company for the 12 months to end December are poised to soar sky high, despite the setback of Eskom’s power outages.
The big expected earnings increases have been primarily driven, the JSE-listed company says, by a 38% increase in the rand basket price and continued steady operational performance, notwithstanding the outage-induced loss in production of 38 000 oz and deferred refined production of 89 000 oz.
With palladium and rhodium prices at heady record heights and even diesel-hit platinum rising stealthily into a higher bracket as the new year progresses, the headline earnings of Amplats, headed by CEO Chris Griffith, are expected to rocket 131% and the headline earnings per share to rise by an even higher 151%.
Basic earnings of between R17.545-billion and R18.9-billion are expected, compared with R6.817-billion in 2018, the company says in a release to Mining Weekly.
South Africa-headquartered Amplats mines, smelts, refines and markets PGMs at a time when some analysts are expecting more on the price front from palladium, which, as Bank of America Securities analysts note, has already rallied by more than 1 500% since 2009,
Palladium futures last traded at $2 176.10/oz, down more than 6% on the day, according to Kitco News, which suggests that its price rally “may continue exponentially up to the point where some substitution occurs, more secondary metal hits the market or more stock is released”.
Palladium is used in vehicle catalytic converters to reduce harmful emissions from petrol-fuelled engines, with more palladium being added to catalytic converters to meet ever-tightening emission standards.
Bank of America analysts do not see platinum substitution nor recycling resolving the palladium supply deficit in the short term.
“There are limits as to how much more recycled palladium can come back to the market,”say the analysts, who do not believe that there is a large stock of spent catalysts available for recycling.
RHODIUM OUTDOING GOLD
Rhodium prices have surged 65% to $9 985/oz in 2020, according to British chemicals company Johnson Matthey, with the surge building on last year's rally and extending rhodium's advance over the past 12 months to 300%-plus.
Used in both petrol and diesel cars, rhodium is especially good at cleaning up nitrogen oxides, according to Arlington Group Asset Management analyst Roger Breuer.
The latest Economist reports that criminals were seen sawing the catalytic converter off a 12-year-old Honda Jazz in a car park outside Oxford on January 10 to get their hands on the rhodium in it.
Although the rhodium price is leaving the gold price in its dust, the rhodium market is very tiny next to that of the huge gold market. The estimate is that last year’s rhodium market of 792 000 oz was about 1% of that of gold. But with environmental protection on everybody's lips, its growth is non-stop and German chemicals company BASF estimates that China’s car market alone will this year increase demand for rhodium by 40%.
But with electric vehicles, which do not use PGMs) grabbing all the headlines, question are being asked about the medium- to longer-term demand for PGMs.
Will hydrogen fuel cell vehicles, stationary hydrogen fuel cell electricity generators and hydrogen-producing electrolysers create the demand that is needed to keep South Africa's mining industry making the sort of profits that Amplats is expecting to announce soon?
The good news is that there is considerable action on the hydrogen fuel cell front.
Virtually every month, for example, the Fuel Cell & Hydrogen Energy Association lists large numbers of new initiatives that use hydrogen fuel cells and thus PGMs, and its latest report is no exception.
Under its fuel cell and hydrogen energy headlines, the association states that:
- vehicle manufacturer Toyota is increasing the hydrogen capacity of its new Mirai fuel cell car to improve its driving range;
- vehicle manufacturers Honda and Isuzu have agreed to research the joint building of heavy-duty trucks powered by hydrogen fuel cells;
- strategic planning has begun on infrastructure in Utah, in the US, where hydrogen storage capacity of 150 MW hours of electrical power is envisaged by 2024;
- the US Department of Energy has announced funding for an increase in the scale of hydrogen production, storage, transport and use in heavy-duty trucks, data centres and steel production;
- Air Products has announced a $500-million investment in hydrogen production;
- Plug Power of the US has received a $172-million order for fuel cell engines from a Fortune 100 customer;
- New York Stock Exchange-listed Bloom Energy is supplying 40 grocery stores with always-on fuel cell microgrids; and
- FuelCell Energy has announced the start of a commercial operation of its 2.8 MW fuel cell power plant at a waste water treatment plant in California.
CPM MD Jeffrey Christian has told Mining Weekly in a video interview that growing sun and wind power use, as well as liquid organic hydrogen carrier (LOHC) advances, are sweeping former limiting issues aside to make hydrogen’s $1/ℓ, or $4/gallon, cost competitive with petrol.
“Research has continued quietly; we’ve jumped through some hoops, and now, all of a sudden, the hydrogen economy looks like it could happen,” Mining Weekly quoted Christian as saying.
Being hailed are hydrogen’s infinite supply horizon, exceptionally good energy density and emission-free production potential from many sources.
At the point of use, hydrogen is able to provide clean electricity and can be stored for as long as one likes – a day, a week, a month, a year or ten years.
The oil-like character that LOHC technology provides allows hydrogen to be transported, stored and dispensed conventionally. A cubic metre of LOHC can convey 57 kg of hydrogen. Currently used fossil fuel road tankers, rail tankers, ships and pipelines can be used to render hydrogen tradable on a global scale.
“In my eyes, hydrogen’s most important contribution to a future energy system will be that it makes renewable energy transportable and tradable on a global scale,” said Germany-based Hydrogenious Technologies LOHC founder and CEO Dr Daniel Teichmann in response to questions put to him by Mining Weekly.
“But there is still a lot of work to be done. We need the political will to make the hydrogen economy a success story. We need government funding for research and development and for industrial-scale projects that demonstrate the technical as well as commercial feasibility of hydrogen use. In addition, the industry worldwide has to contribute its fair share and make an even stronger commitment to hydrogen,” Teichmann stated in his written response.
‘Green’ hydrogen is produced by splitting water into hydrogen and oxygen in electrolysers.
Council for Scientific and Industrial Research senior research engineer Thomas Roos has outlined to Mining Weekly that South Africa, with its excellent solar and prime wind energy potential, is well placed to produce and export clean renewable hydrogen.
To produce hydrogen, it is envisaged that renewable power will be used to desalinate seawater at the coast or brackish water and acid mine drainage inland, and then to electrolyse the desalinated water. Some 50 kWh of electricity will be required to electrolyse 1 kg of hydrogen.
Roos stated that South Africa’s combined solar and wind power provides a hydrogen production capacity factor of almost 100% during daylight hours; during the night, wind will enable electrolysers to produce hydrogen at a capacity factor of about 30%, which is higher than the international norm of about 22%.
Isondo Precious Metals CEO Vinay Somera, whose company is planning to manufacture membrane electrode assemblies for fuel cells at the OR Tambo International Special Economic Zone, has advocated that South Africa’s sunlight, wind, platinum and base metals be combined within a value chain to boost the South African economy.
South African company Hydrox Holdings, which has patented a water electrolysis method that is membrane-free technology, is targeting hydrogen production at a cost of below $7.5/kg
Hydrox CEO Corrie de Jager has reported that Hydrox’s divergent electrode flow through electrolysers can operate at temperatures greater than conventional systems, owing to the absence of a temperature-limiting membrane.
Envisaged is the establishment of hydrogen-producing plants outside the bigger cities to provide existing petrol filling stations with hydrogen from compressed gas cylinders.
Hydrogen South Africa Infrastructure (HySA Infrastructure) director Dr Dmitri Bessarabov has pointed out that hydrogen and fuel cell technologies are presenting major beneficiation opportunities for South Africa’s PGMs sector, as PGMs are required not only as catalysts in fuel cells but also in electrolysers that produce hydrogen, for which there is export demand. HySA Infrastructure has been successfully operating a solar-to-hydrogen system since 2013.
When President Cyril Ramaphosa went to Japan in 2015 as Deputy President, he drove a hydrogen-using Toyota Mirai fuel cell electric vehicle. At the time, Ramaphosa and the then Science and Technology Minister and now International Relations Minister, Naledi Pandor, were attending the Japan-South Africa hydrogen and fuel cell symposium. Later, while launching a fuel cell forklift and hydrogen refuelling station at the Impala Platinum refinery, in Springs, Pandor noted the need for South Africa to address the issue of hydrogen distribution from highly dispersed sources.
Bulleit Group’s Sarah Rachul states in an email to Mining Weekly that with the hype for the 2020 Olympics in full swing, all eyes are on Japan as it prepares to host the big event, which some have dubbing the Hydrogen Olympics.
Toyota, which is planning to build a hydrogen-powered “Woven City” at the base of Mount Fuji, is clearing many hectares of land to build and test this prototype city that will feature autonomous vehicles, subterranean deliveries, and domestic robots—all planned to be hydrogen-powered.
This effort aligns with Japan’s desire to adopt hydrogen fuel over other alternatives such as batteries— desire that’s shared by numerous countries and companies across the world.
The accelerated adoption of hydrogen as a fuel has been widely acknowledged by analysts, owing to its wide variety of applications, zero emissions except heat and water, and the growing number of ways it can be produced cleanly.
Opinions on managing the transition to a low-carbon global future are being heard from Germany to China.
The European Commission, under new president Ursula von der Leyen, wants to be the world’s first carbon-neutral economic bloc by the middle of the century.
Many attending Davos wasted no time in spreading environmental, social and governance (ESG) dogma across the Swiss Alps and world leading investment manager BlackRock is demanding climate friendliness from all the companies in which it invests. Making the most of climate friendliness has become a sign of the investment time, with ESG here, ESG there and ESG simply everywhere.
Mining Weekly will be publishing a major feature entitled Hydrogen, Fuel Cells and the Green Economy and companies wanting to advertise in the feature should contact Creamer Media COO Sales and Marketing Reinette Classen at +27 11 622 3744. Those with news should speak to Martin Creamer at the same number.