Platinum group metals (PGMs) are rare precious metals with unique physical properties that are used in diverse industrial applications. Palladium, like gold, silver and platinum, is a precious metal, as well as one of the six PGMs, which also include platinum, rhodium, ruthenium, iridium and osmium.
Palladium’s primarily used as a thin coating on ceramic filters insider of catalytic converters in automobile engines. It acts as a catalyst to convert carbon monoxide to carbon dioxide and converts hydrocarbons and oxides of nitrogen into pure oxygen, nitrogen and water. Demand for palladium is expected to exceed supply over the next few years, driven primarily by the continued growth in automobile sales.
As a rare precious metal, there are very few palladium producing regions worldwide and few known economically viable ore bodies. Forecasts indicate that Russia (38% share) and South Africa (40% share) will account for three-quarters of global palladium mine production, with important contributions coming from North American (14%) and Zimbabwe (6%) (source Johnson Matthey, 2016). Growth in mine supply is constrained, largely owing to:
- Political, infrastructure and cost issues in South Africa;
- Relatively constant palladium production in Russia; and
- The very small number of new projects on the horizon in the near future.
Demand for palladium continues to grow, driven primarily by the automotive sector that consumes nearly 80% of world palladium supply for the manufacture of catalytic converters in cars that help reduce toxic emissions into the environment. The demand for palladium in the automotive industry has more than doubled in the last ten years due to an increase in global automotive production and the tightening of emissions standards worldwide, resulting in steady growth in the use of catalytic converters.
The primary driver of growth in the automotive sector is from the emerging economies, especially Asia, where there is emerging affluence, very low penetration of vehicles per capita, and where the affordability factor is high due to low interest rates and leasing programs. In addition, the recent recovery of the US auto sector has also strengthened demand for palladium.
The platinum market is likely to be in deficit for each of the years from 2016 through 2021 at an average annual deficit of 250,000 ounces. As a result, prices will rise over the period. Mine supply is not expected to rise significantly with older established mines declining, particularly as investment has been depressed due to low prices in recent years but also as part of a longer-term trend. New mine production will rise with three new mines in South Africa coming onstream and modest increases forecast in Zimbabwe. Supply from recycling has been on the rise, as it is with all PGMs and this trend is expected to continue in spite of currently low prices. Supply from end of life recycling has become an increasingly important source of platinum supply with supply levels relatively unaffected by modest changes in prices. (Source)
Demand for palladium continues to grow, driven primarily by the automotive sector for the manufacture of catalytic converters in cars that help reduce toxic emissions into the environment. The demand for palladium in the automotive industry has more than doubled in the last ten years due to an increase in global automotive production and the tightening of emissions standards worldwide, resulting in steady growth in the use of catalytic converters. (Source)
The World Platinum Investment Council forecasted the global platinum market ended year 2015 in deficit by 380,000 ounces, with key drivers of the shortfall including:
- A 5% increase in automotive demand, reaching 3,455,000 ounces, up from 3,290,000 ounces in 2014 and 3,160,000 ounces in 2013
- An increase in global investment demand of 110,000 ounces (73%) over the year
- A 4% increase in industrial demand during 2015, buoyed by a 2% increase in chemical demand growth driven by North America, Western Europe and China
- A 24% increase in refined production, led by a 41% increase in output from South Africa, where operations affected by the 2014 strikes returned to prestrike levels and producer sales again exceeded refined production
- a 15% decline in global supply from recycled platinum as lower platinum group metals prices reduced the flow of scrap catalysts from collectors, while depressed steel prices reduced the scrapping of vehicles
Credible forecasters such as IHS Automotive predict that global light vehicle production will be in the range of 90 million units in 2015, rising to 100 million units by 2020. Automotive sales are returning to their historical norms in mature economies, especially in the United States, and are on the rise in China – which is expected to account for 50% of the forecast 15% growth in light vehicle sales from 2014 to 2020. (Source)
Properties of PGMs
The six Platinum Group Metals (PGMs) are Platinum, Palladium, Osmium, Ruthenium, Iridium and Rhodium. PGMs are known for their:
- Strength and durability
- Strong catalytic properties
- Resistance to oxidation and corrosion
- Conductivity and ductility
- High melting point
- Geological scarcity (much rarer than gold)
Platinum and Palladium are soft, ductile and resistant to oxidation and high temperature corrosion. They have widespread catalytic uses. In industry they are often used with the addition of other metals, including other PGMs.
Rhodium and Iridium are difficult to work, but are valuable alone as well as in alloys. Their chemical compounds have many uses, and rhodium is a particularly good catalyst.
Ruthenium and Osmium are hard, brittle and almost unworkable in the metallic state, with poor oxidation resistance, but are valuable as additions to other metals, usually other PGMs, and as catalysts. (Source)
Third Party Reports
World Platinum Investment Council - July 2017
Johnson Matthey - May 2016
World Platinum Investment Council - July 2017
Palladium use in consuming applications exceeded 10 million oz for the first time.
Johnson Matthey, 2017
PGMs are most commonly used for technological advances in the fields of autocatalysts, power generation, alternative fuel sources, transportation, electronics and healthcare. (Source)
An automotive catalytic converter is one of the several elements of an exhaust system that reduces the emission of harmful pollutants, such as carbon monoxide (CO), hydrocarbons (HC) and nitrogen oxides (NOx).
- Most vehicles now have catalytic converters
- Catalytic converters convert harmful gases from hydrocarbon emissions into less harmful substances
- Each catalytic converter contains 3-7 grams PGM, depending on vehicle size, manufacturer and model
- Palladium contents higher for gasoline engines (North America, China)
- Platinum contents higher for diesel engines (Europe)
PGMs play key roles in the fuel cell technology, which combines hydrogen and oxygen to produce electricity, heat and water. PGM catalysts cause the hydrogen atom to split into protons and electrons.
The advantages of fuel cells for transport are both environmental and economic. Fuel cell cars have similar range and performance to cars with internal combustion engines, but the superior energy efficiency of fuel cell engines brings a significant reduction in carbon dioxide.
Fuel cells can also provide electric power for homes and offices, and fuel cells can compete with batteries and generators for portable use, from a few kilowatts to power a mobile home down to a few watts to power a laptop computer. (Source)
Among the main advantages of platinum for jewellery fabrication are its strength and resistance to tarnish. It can be repeatedly heated and cooled without hardening and oxidation effects, while even the most slender sections of platinum permanently retain their shape, providing a secure setting for diamonds and giving jewellery designers a freedom of invention not always possible with other materials. Perhaps the best example of platinum's technical virtuosity is the tension ring, in which a gemstone is held in place by the tensile strength of the platinum ring shank alone.
Other platinum group metals—Palladium, Ruthenium and Iridium—and copper and cobalt are commonly alloyed with platinum to optimize its working characteristics and wear properties. (Source)
Other PGM Applications
- Hard Disks
- Electronic Components
- Physical Investment
Top Platinum Producers
South Africa is the largest producer of platinum. Mining platinum from the Bushveld Complex began in 1925 with palladium and rhodium as by-products.
Russia is the largest producer of palladium. Norilsk Nickel began producing copper and nickel in 1935 with palladium and platinum as by-products.
Canada has produced pgm as by-products of nickel mining since 1908. Stillwater in the USA is a palladium-rich mine which began production in 1987.
Platinum was discovered in the rocks of the Great Dyke in 1918, but significant output from this extensive resource only began in the 1990s.
Source: Johnson Matthey