Breakthrough catalyst technology won’t move platinum market yet

Improved catalytic converter technology could have a marked impact on pgm demand in three to five years.

JOHANNESBURG - 

Recent improvements in engine and catalytic converter technology could see PGM loadings in catalytic converters reduced by between 70% and 90%, but the platinum market is not set to weaken yet.

Mazda Motor Corporation recently announced a breakthrough in catalytic technology through the use of nanotechnology, which the company believes will reduce PGM loadings in catalytic converters substantially.

RBC Capital believes this technology, that could see loadings fall by 70-90%, will have a marked impact on the platinum market, but only in three to five years. The bank said in a recent Equity Research report that it was still a long way from being implemented on a commercial scale.

Mazda is essentially focused on the gasoline side of the automotive market, which suggests the reduction in PGM loadings is likely to have a much greater impact on the palladium market than the platinum market.

Nissan Motor Corporation has also announced that it has developed a catalytic converter that uses at least 50% lower PGM loadings. Both Ford and Renault have direct links with these two companies and it is assumed that information will be shared between these organisations.

In addition, engine manufacturers are attempting to develop technologies that could change the permanent need for PGM-based catalytic converters altogether.

"We believe the announcements are important indications that the current level of PGM prices is too high and we will likely continue to see "aggressive thrifting" (increased efficiencies in application) and substitution," said RBC.

"Such developments are very clear indications that commodity price cycles do peak and decline, but the "world as we know it" has not changed yet."

RBC conceded that platinum demand could increase significantly as there was a possibility that the US market would adopt the European appetite for diesel cars and global emission legislation would continue to tighten.

"But further meaningful increases in PGM prices are likely to hasten a fall. Our longer-term metal price forecasts therefore reflect a declining price environment."

History has shown that technological changes of magnitude usually take a long time to have an impact and therefore market changes are not expected within the next three years or "even longer".

"Short-term fundamentals will be influenced far more by the amount of potential production that could be delivered from the raft of junior mining companies currently positioning themselves."

SUBSCRIBE to Mineweb.com's free daily newsletter now.

Print story      Email story      Subscribe to free newsletter
Related Links ARTILCES:  Palladium substitution caps platinum demand  High metal prices cause sharp rise in theft for scrap   OTHER PAGES:  PLATINUM GROUP METALS AFRICA

Back