Platinum Group Metals (PGMs)—platinum, palladium, rhodium, and others are critical resources for both traditional and emerging industries. Their unique properties, including resistance to corrosion, high melting points, and catalytic abilities, make them indispensable in a range of applications. Platinum and palladium are classified both as precious metals, along with gold and silver, and critical metals under the Canadian Critical Minerals. While prices have fluctuated in recent years, and the market has seen some downturns, the long-term outlook for PGMs remains positive. In this blog, we’ll explore why prices have been subdued recently and what factors are setting the stage for future growth.
One of the most critical drivers of PGM demand remains the automotive industry, particularly the use of catalytic converters in internal combustion engine (ICE) vehicles. Though electric vehicles (EVs) are on the rise, ICE vehicles still dominate the market and are projected to do so for years to come. Governments across the globe are implementing stricter emissions regulations, pushing car manufacturers to produce cleaner, more efficient vehicles. This translates into continued reliance on catalytic converters, which are made using platinum and palladium to reduce harmful emissions. This steady demand will likely provide consistent support for PGM prices over the next several years. It is also important to note that hybrid vehicles tend to require a higher loading of PGMs in their catalytic convertors.
In addition to the automotive sector, PGMs are poised to benefit from the growing adoption of hydrogen fuel cell technology. Hydrogen fuel cells, which require platinum, are gaining traction as a clean energy alternative, particularly in industries where batteries alone are not sufficient, such as heavy trucking, shipping, and even aviation. As global governments and corporations commit to decarbonization, investment in hydrogen infrastructure is ramping up, and this could significantly boost the demand for platinum in the coming years. Palladium is a crucial component of hydrogen storage. The hydrogen economy, still in its early stages, could drive the next wave of growth for platinum, making it an attractive investment for those with a long-term perspective.
On the supply side, PGMs face certain constraints that could also contribute to future price increases. A significant portion of the world’s platinum and palladium supply comes from South Africa and Russia—two regions that face considerable political and logistical challenges. South Africa, for example, has been grappling with labor disputes and power shortages, while Russia’s geopolitical tensions create ongoing uncertainty. These factors have the potential to disrupt supply, which would naturally push PGM prices higher. In contrast, stable and reliable sources of PGMs, such as the River Valley Project located in the Sudbury mining district of Ontario, offer a more secure alternative for industries dependent on these metals. PGMs have been labeled as critical minerals and it will be in the best interest of North America to find sources outside of Russia and South Africa.
While automotive applications remain central to PGM demand, their uses extend far beyond cars. PGMs are also critical in electronics, healthcare, and chemical processing. Platinum and palladium are used in a range of products, from pacemakers and chemotherapy drugs to fuel cells and turbine blades. As technological advances continue in these sectors, the need for PGMs will only grow, further enhancing the long-term prospects of the market.
Finally, both palladium and platinum, are precious metals with investment value, share a close relationship with gold and silver in the broader precious metals market. Historically, as gold and silver rise in price and prominence due to economic factors, palladium and platinum often follow suit. This is because these metals not only serve as key components in industrial applications, but also act as alternative investments for those seeking to diversify their portfolios beyond traditional precious metals. Like gold (ISO code XAU) and silver (ISO code XAG), both palladium (ISO code XPD) and platinum (ISO code XPT) have standardized ISO codes that facilitate their trade on global financial markets. This recognition underscores their status as valuable assets, with potential for price increases driven by demand across various industries and their correlation with the overall performance of precious metals.
Looking at the broader picture, it’s clear that the current low prices do not reflect the potential future demand for PGMs. The combination of supply constraints, the continued necessity for catalytic converters, and the growing importance of hydrogen fuel cells suggest that PGMs are well-positioned for a rebound. While market fluctuations are always a possibility, the fundamental drivers of demand remain strong.
At New Age Metals, our River Valley Project is ideally situated to capitalize on these trends. Located in a politically stable region with robust infrastructure, the project has the potential to supply North America with a critical source of platinum group metals as demand continues to rise. With the world transitioning to greener energy solutions, the role of PGMs in this transformation cannot be overstated, and River Valley stands ready to contribute to this promising future. The River Valley Project is currently at the development stage, having released a Preliminary Economic Assessment (PEA) in 2023. NAM has 100% ownership and is working on PEA recommendations, including the Project’s tremendous exploration upside.