TORONTO (miningweekly.com) – A Quebec-based green technology firm is hoping to build its first full-scale plant that would extract platinum-group metals (PGMs) from used catalytic converters.

Platinum and palladium prices were on Friday trending lower as a result of reports that South African mining unions were on the verge of committing to a wage deal in the longest strike in the platinum-producing country’s history.

The strike, which started in January, had raised questions about global PGM supplies, driving up costs for the precious metals that are used in a myriad of industrial applications, of which catalytic converters make up a significant part.

This has enable Quebec-based NovX21 to get a foot in the door. It aims to become a stable PGM supplier by converting spent autocatalytic converters back to PGM concentrates and reselling it to refiners.

Catalytic converters are used in vehicles to control exhaust gas pollutants and PGMs often act as the catalysts, owing to their reactivity, by catalysing a reduction or oxidation reaction. An average catalytic converter contains about 52% platinum, 42% palladium and 6% rhodium.

The TSX-V-listed NovX21 is on the verge of building its first full-scale plant, the location of which is yet to be announced.

Despite catalytic converters being recycled for many years, the firm plans to do it in a much cheaper and environment-friendly way.

In an interview with Business News Network (BNN) on Friday morning, NovX21 CEO Sylvain Boulanger said the company’s technology works on a very simple premise.

He explained that the company had developed a chlorination process to reclaim platinum as well as palladium and rhodium from spent converters. The process had been patented in the US and in Canada.

NovX21’s process takes about two months to extract the PGMs from a converter and can recover about 97% of PGMs, or about 3 g per converter, which is roughly equal to about $115 from each catalytic converter. Boulanger said the cost of processing and refining a converter was $13.50.

On average, each ceramic component yields a grade of 3 000 g/t of PGMs per tonne of ceramic.

The process produces no waste, with the ceramic being reclaimed and sold to the hydraulic-fracturing materials market.

The company estimates that it will cost about C$168/oz to operate its reactors.

Spot prices for platinum this week peaked at $1 480/oz and palladium was trading at a 14-year high of $862.50/oz on Wednesday, pushed up by supply concerns as a result of the South African industrial action.

According to a Capital Economics study, the loss of South African output, coupled with resurgent demand, will send the platinum market into a deficit this year. Capital Economics expects platinum prices to pick up in the second half to finish the year at $1 600/oz, with further upside potential.

NovX21 expected each of its plants to cost between $8-million and $10-million, with the ability to generate revenue of between $22-million and $29-million a year, depending on metals prices, and operate at a gross margin of 33%.

The company had completed its research and development of the technology and was running a demonstration plant at St-Augustin-de-Desmaures, in Quebec City.

Boulanger said the company planned to raise money soon to build its first scalable full-size plant in Canada. Investors were on Friday speculating whether a second plant, earmarked for Germany, was on the cards.

Boulanger said the company expected to be able to compete commercially with recyclers in Japan and elsewhere that used conventional smelting processes to recover precious metals, owing to the low-cost nature of the technology.

Further, NovX21 seemed to have serendipitous timing in introducing its clean technology to the market, as environmental standards set by the European Union called for automobile recyclers to recycle 95% of vehicles by January 2015. This was compounded by analyst forecasts of a widening supply deficit for platinum and palladium in 2015.

Looking to the future, Boulanger told BNN that the advent of lithium-ion battery-powered vehicles and hydrogen fuel-cell-powered vehicles augured well for the company’s business model, noting that the average fuel cell held about 30 g to 60 g of PGM, translating to about 10 to 20 times the amount of recoverable metals for the company.

Last month, NovX21 announced that European and North American suppliers of catalytic converters had expressed interest in the company’s technology by sending material to the Saint-Augustin-de-Desmaures plant to be processed, to demonstrate to the suppliers that the process’ green technology met new environmental standards.

The next step in this collaboration would be the signature of long-term supply agreements for NovX21's new plant.

The company’s TSX-V-listed stock on Friday traded at C$0.115 apiece.