JOHANNESBURG (miningweekly.com) – Viable patents that involve the use of platinum group metals (PGMs) should be commercialised so that PGMs become less dependent on the automotive market, says CPM Group MD and founder Jeffrey Christian.

CPM’s current projections, which are similar to those of the automotive and electricity supply industries, are that by 2050, a third of vehicles being manufactured might be vehicles that no longer require PGMs, which leaves a demand gap that PGM patents may potentially be able to fill.

“There are many, many, many patents for platinum and palladium uses and we need to see some of those commercialised so that platinum, palladium and rhodium are not dependent on the auto industry for 40% or 60% or 80% of their demand, but rather that they have a lot of other uses that have smaller market shares,” says Christian, who dismisses the long-standing projection that hydrogen fuel cells are destined to move into the demand breach left by vehicles that no longer require catalytic converters. (Also watch attached Creamer Media video for full report).

While it has been contended that the provision of hydrogen infrastructure will create platinum fuel cell demand, Christian’s view is that safe and affordable hydrogen infrastructure will more likely open the way for zero emission hydrogen internal combustion engines that are half the cost of petroleum internal combustion engines, one seventh of the cost of electric battery packs and one twentieth of the cost of platinum-using fuel cell stacks. Moreover, their maintenance costs are also lower.

As with PGM patent commercialisation, new transactions that have been struck also have the potential to diversify PGM demand and protect South Africa’s PGM mining industry.

One of these is the deal that AP Ventures has struck with Japanese trading giant Mitsubishi, which develops and operates businesses across the industrial spectrum.

As reported by Mining Weekly Online in December, Mitsubishi has thrown its weight behind technologies that harness the high-performance characteristics of PGMs, by joining Anglo American Platinum (Amplats) and South Africa’s Public Investment Corporation (PIC) as an investor in AP Ventures, which has a special investment interest in hydrogen infrastructure, fuel cell electric mobility and energy storage. PGM technologies are also featuring in water purification and medical device development.

PIC and Amplats have each committed R1.3-billion to AP, the first venture capital fund of its kind that specialises in pioneering technologies and businesses that make use of PGMs.

“We hope to nurture the growth of innovative precious metals technologies that will help improve lives and the society we live in,” Mitsubishi GM for Precious Metals, Mineral Resources Trading Division Yusaku Yukita stated in a release to Creamer Media’s Mining Weekly Online.

Mitsubishi’s activities have expanded far beyond its traditional trading operations to include investments and business management in diverse fields including natural resources development, manufacturing of industrial goods, retail, new energy, infrastructure, finance and new technology-related businesses.

Amplats has transferred its PGM development investments in Altergy Systems, Food Freshness Technology Holdings, Greyrock Energy, HyET Holdings, Hydrogenius Technologies, Primus Power and United Hydrogen Group to AP, which is headed by Ventures managing partner Andrew Hinkly, Amplats’ former marketing executive.

Headquartered in London, AP is committed to opening a further office in South Africa and to raising additional capital from other investors.

PIC’s stated motivation is to help to stimulate and sustain the demand for PGMs in the long term, and by so doing benefit its clients and preserve long-term mineral wealth for all South Africans in a world that needs solutions to renewable energy integration, resource scarcity and a growing global population.

PLATINUM BETTER THAN PALLADIUM FOR MANY ENGINE TECHNOLOGIES

“We’re much more bullish on platinum, over the next five to seven years, than we are on palladium,” says Christian.

While palladium has already made its upward price move, platinum has yet to do so.

“We think that one of the factors you’re going to see is a shift away from palladium back to platinum,” he adds.

This was already occurring on an ad hoc basis last year and automotive re-engineering that accommodates platinum catalysts is expected to emerge in the second half of this year as new vehicle models are introduced.

BMO Global Commodities Research reported on Thursday that major Russian company Norilsk Nickel produced 10% less palladium in the fourth quarter of last year, leaving full year production down 2% at 2.7-million ounces.

“There’ll start to be a more significant shift away from palladium towards platinum in catalysts,” Christian predicts.

RHODIUM CONSTRAINTS CAUSING CONCERN

The automotive industry is reportedly “extremely concerned” about its long-term exposure to rhodium, the market for which has been in a deficit almost every year since 1980, the year in which the US automotive industry started using it to reduce nitrous oxide and nitric oxide emissions.

The production of rhodium, which is the only metal able to reduce these oxide emissions cost effectively, is constrained owing to it being mined as a byproduct of platinum, palladium and nickel.

“What we’re seeing is the beginning of what we think will be a parabolic upward movement of rhodium prices, similar to what we saw from 1989 to 1991 and again from 2003 to 2008. But then you had rhodium inventories that knocked the price back down. Now we’re not sure that there’re sufficient rhodium inventories out there to contain any parabolic upward movement of rhodium,” he says.

IRIDIUM, OSMIUM PRICES ALSO RISING

Iridium prices have been rising on the back of its use in a number of smaller applications by companies not requiring large quantities of the PGM, and even the osmium price has risen recently.

“Osmium has had limited uses for several decades but there seems to be some new uses and all of a sudden you don’t have it there,” was Christian’s comment. (Also watch attached Creamer Media video).

At the time of going to press, rhodium was selling at $2 475/oz, the highest price of the PGMs. Platinum was at a low $815/oz, palladium at $1 360/oz, iridium at $1 460/oz, osmium at $400/oz and ruthenium at $266/oz.