Hope springs eternal on the platinum group metals front — with reason
Sun Oct 06 2024
In July, Chinese sales of battery electric vehicles (BEVs) and hybrids exceeded those with internal combustion engines for the first time. The split was just 51% to 49%, but it represented an ominous milestone for South Africa’s struggling platinum group metals (PGM) producers.
China is both the world’s largest producer of and market for automobiles, and the rise of BEVs has been one of the key forces undermining PGM prices, which have collapsed from record peaks scaled a few years ago.
It boils down to this: the main industrial use for PGMs is for emissions-capping catalysts in internal combustion engines – this still represents two-thirds of demand – and BEVs don’t use them.
But PGMs have other uses and chemists are constantly mixing and matching these elements from the periodic table to find new applications for them.
And there are signs that, although China is embracing BEVs, it is finding new uses for PGMs in the emerging hydrogen economy.
Paul Dunne, the CEO of Northam Platinum, recently told Daily Maverick in an interview that the company had detected flows of platinum and ruthenium into China that it could not account for.
“We cannot identify the industrial use for all the ounces flowing into China, we cannot identify the end use. It’s opaque. There seems to be more platinum flowing than we would have expected given our understanding of the industrial base. It’s the same with ruthenium,” Dunne said.
Ruthenium is used in electronics for chip boards and disk drives, and so the end use is probably under wraps for commercial reasons – or perhaps those linked to national security.
Chinese fibreglass makers in recent years crashed the rhodium price after it hit record highs near $30,000 an ounce – making it the most expensive precious metal in history – by substituting far cheaper platinum in the alloy mix.
Dunne noted that the platinum flows could be related to the emerging hydrogen economy and that is where a lot of bets are being placed on future demand.
“China is driving hydrogen demand, certainly in the public transport sector, and that seems to be driving it. And it’s great if China is driving it because, whatever they do, they do at a big scale,” Andries Rossouw, the Africa resources leader for PwC, told Daily Maverick. “And that could open up the early commercialisation of the hydrogen economy in a big way.”
On the hydrogen front, proton exchange membrane technology uses platinum catalysts in electrolysers and in hydrogen fuel cells to produce carbon-free electricity.
Fuel cell electric vehicles are seen as an area of growth and the technology can be applied to power ships, trains and aircraft. More broadly, the technology can also be used in fossil fuel-free power generation or for feedstock for chemical and industrial processes, including steelmaking.
This points to the role that PGMs are seen playing in the global decarbonisation drive.
Anglo American Platinum (Amplats), the world’s leading PGM producer, has devoted a lot of energy to developing fuel cell electric vehicles. One of their advantages is that they can travel for long ranges and refuel quickly, making them a clean energy version of traditional petrol and diesel-powered vehicles.
In a presentation to the Joburg Mining Indaba on 2 October, Amplats CEO Craig Miller said that even with only a 10% share of global light-duty vehicle sales, fuel cell electric vehicles would “create meaningful demand for PGMs”.
Miller also noted that BEV demand was stalling in the face of concerns about pricing, potential subsidy reductions and utility concerns. And sales of hybrid vehicles that use PGMs were rising, with 7% global growth recorded in 2023.
Unlocking future applications for PGMs is also gaining pace.
Richard Stewart, Sibanye-Stillwater’s chief regional officer for southern Africa, told Daily Maverick on the sidelines of the Joburg Indaba that one company – which he declined to name for commercial reasons – heavily involved in metals research and development had drilled down to dissecting PGM properties at the atomic level with modelling from AI.
“They now have the technology where they can look at it atom by atom and they can start spotting things and putting them together and pulling them apart and they can actually see what they are doing on an atomic level,” Stewart said.
“The efficiency trends can be mapped out much quicker. In the past it was a shot in the dark for months and months before we started getting some kind of trend. Now it can be modelled with AI.”
He said the list of potential PGM uses, including for medical applications, was growing as a result.
The industry is also in talks with the South African government to declare platinum a reserve asset to stoke demand from the South African Reserve Bank and to issue coins modelled on Krugerrands.
The stakes are high. One of South Africa’s competitive economic advantages is its PGM endowment, which accounts for about 70% of global production of the precious metals.
Rhodium has plunged from its record highs of close to $30,000 an ounce three-and-a-half years ago to about $4,700 currently. Over the same time frame, palladium has tumbled to close to $1,000 an ounce from more than $2,900. Platinum has muddled along, hovering around $1,000 an ounce.
South Africa’s PGM sector has shed thousands of jobs – many through attrition rather than retrenchment – and the record profits of three years ago that generated record taxes and a lifeline for the strapped Treasury are gone.
A big rebound is not seen in the short term, but the long-range outlook is brightening.
South Africa’s PGM sector has been in dire straits before. A decade ago it was battered by low prices and waves of violent labour unrest. The latter has largely subsided and chemistry – and opaque moves in China – are seen underpinning prices.
“We have been through downturns before,” Amplats’ Miller told the mining indaba. “And each time we’ve emerged stronger, more resilient and more innovative.” DM
Source: https://www.dailymaverick.co.za/