JOHANNESBURG (miningweekly.com) – Demand for platinum, the price laggard of the high-flying platinum group metals (PGMs) basket, is being actively promoted on several fronts, Implats reported on Thursday.
Following the company’s presentation of stellar cash-generating and dividend-yielding financial results, which featured a gross profit margin surge of 240% to R23.3-billion, Implats CEO Nico Muller and Implats Group executive: corporate affairs Johan Theron spelt out short- and long-term promotional activities that are poised to put platinum back in the pound seats. (Also watch attached Creamer Media video.)
Besides the long-standing practice of the Platinum Guild International (PGI) promoting platinum’s jewellery prowess, strong joint industry action on the short-term palladium-to-platinum switching front as well the long-term hydrogen-fuel-cell front were highlighted, in response to questions from both Mining Weekly and also from analysts.
“We’ve been very actively promoting investment demand, particularly in jewellery through the PGI, and we collaborated with BASF and successfully concluded the implementation of a new catalytic converter that promotes switching between platinum and palladium to increase platinum loading in catalytic converters used in gasoline engines," said Muller.
As reported earlier by Mining Weekly, Implats and Sibanye-Stillwater collaborated with German multinational BASF on the tri-metal catalyst technology to reduce the cost of catalytic converters for automotive manufacturers and enhance market sustainability by enabling partial substitution of palladium with platinum in light-duty gasoline vehicles, without compromising on emission standards.
BASF has subsidiaries and joint ventures in more than 80 countries and operates six integrated production sites and 390 other production sites in Europe, Asia, Australia, the Americas and Africa.
“We’ve so far seen a number of the North American autos commit to using this new catalytic converter in some of their models and that has resulted in an upward sentiment for platinum, which is now being included by analysts forecasts for the markets going forward,” said Muller.
With this metals switching and also investment demand for platinum based on its low price compared with the rallying gold price, substantial new long-term demand potential for platinum has also been far more firmly embedded.
“I think what's been a little bit off the radar screen is the lot of work that jointly we’ve done in stimulating and providing pathways to growing the hydrogen economy, and it really is good to see work being published about advances and people thinking longer term about hydrogen and how platinum specifically could play a role in the longer term,” said Theron.
Implats is looking into using fuel cells to generate power at its refinery. The advantages of hydrogen deploying fuel cells include climate change mitigation; operational efficiencies; health and safety benefits; operational cost reduction; the ability to withstand adverse and harsh environmental conditions; energy storage and better land use.
While the Implats media conference was under way, the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC) announced that they had committed project development funding to Mitochondria Energy Company, a South African business completing a bankable feasibility study of a stationary platinum-catalysed fuel cell energy solution.
The project aims to strengthen the energy sector in South Africa by developing a locally-produced fuel cell technology.
The primary objectives of this DBSA and IDC-backed project are to design a 250 kW fuel cell system, building a facility to manufacture the platinum-using fuel cell units commercially.
Muller told analysts: “We’re very encouraged by the improved outlook for platinum. This has been fuelled by the replacing of palladium by platinum in the new catalytic converters that were successfully designed by BASF, with our collaboration, increased investment in jewellery demand, as well as the heightened focus on the hydrogen fuel cells as an alternate to electrification.”
Specialised chemicals company BASF's tri-metal catalyst technology enables partial substitution of palladium with platinum in light-duty gasoline vehicles, without compromising on emission standards.
Much is being done to establish how platinum, which is currently priced at $904/oz, can substitute palladium, which is currently priced at $2 250/oz, in the autocatalysts used in vehicles.
Although more palladium than platinum is produced yearly, demand for palladium from the automotive industry is about three times higher than the demand for platinum and this structural deficit in the palladium market has resulted in sustained market deficits in palladium – contrasting sharply with platinum market surpluses.
The increase in palladium demand is in large part caused by a market imbalance as a result of tightening emission regulations in China, Europe and India, as well as a market shift from light-duty diesel to light-duty gasoline vehicles in Europe. This is resulting in higher costs for automotive manufacturers.
New York-based CPM Group MD Jeffrey Christian recalled in an interview with Engineering News & Mining Weekly during his visit to South Africa earlier this year that tri-metallic catalysts were the dominant catalysts from the seventies, through the eighties and into the nineties.
Christian recalled that catalytic converter company Engelhard Corporation had supplied the tri-metal catalysts prior to being acquired by BASF.
Importantly, tri-metal catalysts enable the partial substitution of palladium with platinum in light-duty petrol vehicles, without compromising emission standards, something which is urgently needed currently to lower the demand for palladium and rhodium, which are in deficit, and to increase the demand for platinum, which is in surplus.
The approach would likely substitute between 20% and 50% of the palladium currently used with platinum and provide a better demand balance, which is absolutely essential for the buoyancy of South Africa’s PGMs mines.
The confluence of demand and supply interruptions is likely to result in moderated deficits in the palladium and rhodium markets in 2020, Implats stated in a media release, and rhodium undersupply at a time of almighty global demand also needs to be tackled urgently. Rhodium is currently several times more costly than gold.
Rhodium, sourced 90% from the upper group two (UG2) reef within South Africa’s Bushveld Complex, is the only viable solution for the control of nitrous oxides (NOx) and the world’s governments are constantly enacting and enforcing tighter legislation to curb NOx. But it is a minority metal in the PGMs basket and the UG2 resource tap cannot be easily opened more profusely at this stage to provide the world with what it is demanding.
“With regards to rhodium, that’s a question that has been asked frequently and regrettably, we don’t have orebodies that are dedicated to rhodium so as much as we’d like to assist in feeding into the high demand for rhodium, it is mined as a product of the entire PGM basket suite. Of course, we have higher loadings of rhodium on the eastern limb, but that’s about the extent of it. We have to mine it in proportion to what the reserves offer us and we’re unable to specifically increasing the supply of rhodium as a single element of the PGM suite,” Muller outlined to Mining Weekly.