Platinum and Palladium Q&A

Why Platinum and Palladium?

PGMs consist of six white metals: platinum, palladium, rhodium, ruthenium, iridium, and osmium.  They occur together in nature along with gold, copper and nickel and are produced from the same ore.  They are mined mainly in Southern Africa, Russia, and North America.

PGMs are indispensable in many industrial applications.  They are very durable, highly resistant to wear, tarnish and chemical attack.  They resist corrosion, have a high melting point, have excellent catalytic properties, are highly recyclable and are used rather than consumed in most applications.

PGMs are the critical component in automotive catalytic converters.  Auto catalysts are the largest demand sector for PGMs and in 2012 accounted for an estimated 56% of gross world demand for platinum, palladium and rhodium combined.  Other uses include jewelry, investment, computer hard disks, mobile phones, aircraft turbines, glass, nitric acid, silicones, anti-cancer drugs, cardiac treatments, implants, dental applications, etc.

Fuel cell technologies depend upon PGMs.  Fuel cells are devices that generate electric power by combining hydrogen (the fuel) and oxygen (from air) over a catalyst such as platinum, with water being the only emission.  Fuel cells are finding their way into automobiles, factories, commercial buildings, back-up power units and remote location installations.  Manufacturers are working to make fuel cells small and cheap enough for the car and home.  Several automakers have announced plans for commercial sales of fuel cell powered vehicles.  Japan has recently set a goal of installing 5.3 million fuel cells in homes by 2030, about 10 percent of all Japanese households.

Why South Africa?

The Company first came from Canada to invest in South Africa in 2002.  South Africa is a sophisticated, diverse and promising emerging market.  It has a favourable demographic profile and a rapidly expanding middle class.  It has substantial infrastructure and an established mining and manufacturing base.  South Africa has mature financial, legal and telecommunications sectors.  Although labour unrest has occurred recently, South Africa has a large pool of semiskilled and unskilled labour.  South Africa has an established rule of law and is politically and economically stable.  Mineral tenure legislation and requirements for the participation of historically disadvantaged South Africans are well codified.

According to the U.S. Geological Survey, 95% of the known world reserves of PGMs are located in South Africa. Industry analyst SFA (Oxford) estimates that in 2014 approximately 62% of world primary platinum production and 29% of world primary palladium production will come from South Africa.

South Africa was ranked as the 56th most competitive country out of 144 surveyed in the 2014/15 World Economic Forum’s Global Competitiveness Index, making it the second highest ranked country in Africa after Mauritius (39th).   South Africa ranked just behind Russia (53rd) and took over Brazil to take third place among the BRICS economies, with China at 28th and Brazil dropping to 57th place.

Why invest in PGMs now?

PGMs are considered strategic metals as they are vital industrial metals subject to limited sources of supply.  Over the last nine years, global demand for platinum has risen steadily by an average of 2% per annum over that period.  Usage in established markets, such as auto catalysis and jewelry, is increasing and new markets are constantly being developed; factors that promise to keep demand for PGMs high.  Unlike gold and silver, which have large above-ground inventories, the above-ground, refined inventories of platinum and palladium are modest in volume.  Continued primary mine supply of PGMs from several deep, older mines has become uncertain due to high costs, safety concerns and industrial action. SFA (Oxford) estimates that global platinum will be in a supply deficit for 2015 and that global palladium will be in a supply deficit for 2015 and into the next several years. PGM producers with the ability or potential to produce safely at lower costs from shallow or mechanized mines should be well positioned relative to the future macro PGM marketplace.

Can we drive cars and trucks and have clean air too?

Cars, trucks, and buses are essential for transportation and freight delivery around the world. However, the exhaust from gasoline and diesel powered engines in these vehicles has been a major cause of air pollution since the middle of the 20th century.  Emissions standards and legislation focus on regulating pollutants released by automobiles and other powered vehicles, as well as emissions from industry, power plants, small equipment such as lawn mowers and diesel generators, and other sources of air pollution.  Clean air legislation is now becoming more stringent globally in an attempt to reduce air pollution and the release of greenhouse gases.  For example, the United States plans to decrease carbon dioxide emissions produced by automobiles from the current 220 g/km to 109 g/km by year 2025.

The catalytic converter is considered one of the most important contributions to the field of air pollution control.  It destroys the three main pollutants found in engine exhaust.  The first widespread introduction of catalytic converters was in the United States automobile market.  Manufacturers of the 1975 model year equipped gasoline powered vehicles with catalytic converters to comply with the U.S. Environmental Protection Agency’s (“EPA”) stricter regulation of exhaust emissions based on the US Clean Air Act of 1970.  Catalytic converters are now a standard feature on vehicles everywhere.  The EPA reports that compared to 1970 vehicle models, new cars, SUVs and pickup trucks are roughly 99 percent cleaner for common pollutants (hydrocarbons, carbon monoxide, nitrogen oxides and particle emissions). 

The automotive catalytic converter consists of a porous honeycomb ceramic base material coated with a PGM catalyst consisting of platinum, rhodium and/or palladium.  Diesel applications are generally loaded with more platinum than palladium, while gasoline applications are the reverse.  In chemistry, a catalyst is a substance that causes or accelerates a chemical reaction without itself being affected or consumed in the reaction.  The honeycomb ceramic base provides a high surface area over which the PGM catalyst material is applied.  The high surface area maximizes contact between the PGM catalyst and the pollutants in the hot exhaust gases as they move through the porous ceramic honeycomb, allowing chemical reactions to occur.  Modern catalytic converters combine carbon monoxide with unburned hydrocarbons to produce carbon dioxide and water.  They also reduce oxides of nitrogen.

Over the past decade palladium has for the most part replaced platinum in gasoline autocatalysis applications. Global auto sales have been strong since 2008, particularly in China and the United States, both gasoline centric markets. This has resulted in a very strong demand for palladium and a price improvement from $200 per ounce in 2008 to $900 per ounce in 2014. Platinum continues to be the mainstay application in diesel technology benefiting from a recovery in the European auto market and strong growth in Chinese heavy duty truck applications.

Why platinum for jewelry and not just white gold?

Valued for its purity, rarity and strength, platinum is considered the most precious of all jewelry metals. Its beautiful colour and elegant appearance make it an ideal choice for brides and all jewelry lovers.  Jewelry demand accounted for an estimated 37% of 2014 platinum production according to SFA (Oxford).

Although they appear similar, platinum should never be mistaken for white gold.  Found in very few places around the world, platinum is over 30 times more rare than gold.  The two metals differ not only in strength, but also in density and colour. White gold is produced from yellow gold alloyed with other metals, making it less pure.  Platinum designs are often 95 percent pure.  By contrast, a 14-karat gold item typically contains only 58.3% of precious metal.  White gold must be coated with rhodium to make it “white”.  Platinum is already white in its pure and natural form.  The colour of platinum is whiter than white gold.  Over time white gold usually loses its white colour as the protective rhodium coating wears away, while platinum does not wear out.

Platinum is stronger and more durable than gold.  Unlike other metals, platinum does not expand or distort when exposed to heat, and it never tarnishes.  Instead, it ages beautifully by developing a lustrous patina. This hypoallergenic metal is heavier than most metals, having a specific gravity approximately 11% higher than gold, and is preferred as a brilliant and secure diamond setting.