It is relatively common for forecasters to comment that the world is in an unprecedented state of uncertainty.
Such calls were heard in the platinum group metals (PGM) sector in the global economic crisis in 2008 and on several occasions since, including during ‘dieselgate’ in the 2010s, then in relation to electrification of the vehicle drivetrain and again in the aftermath of Russia’s invasion of Ukraine (which sets itself apart in this list for the ongoing humanitarian emergency it has caused). To be fair, these have all marked important moments. But do they indicate moments of unprecedented change for these metals?
Geographical Distribution in Supply
On the supply side, we know that the geographical distribution of PGM reserves is not going to change. Much primary metal will continue to be mined in South Africa. Russia is also likely to remain a major player for all the challenges — moral and practical — that currently exist. Zimbabwe could yet become a more important producer, but given the time that it takes to develop a new mine, even if this happens, it is likely to be a gradual process.
The world expects recycling of end-of-life or scrap material to grow in importance, encouraged by rising availability of this material and its high value. But this is a trend that is already a decade old. The relative importance of each source of metal may well change, but the general picture is unlikely to look radically different on the supply side.
However, if we look into our crystal ball, can we see what might change over the coming decade? A growing focus on sustainability seems one likely development, and one might reasonably expect a move to lower carbon energy and lower contained carbon metal throughout the value chain — reinforcing the often-valuable environmental role these metals already play in many of their end uses. Any vision of the future of mining is likely to incorporate more automation and more machinery to keep the workforce safe and ensure a sustainable and positive impact of activities on the environment and host communities.
ON THE SUPPLY SIDE WE KNOW THAT THE GEOGRAPHICAL DISTRIBUTION OF PGM RESERVES IS NOT GOING TO CHANGE
Focus on Demand
However, much of the world’s focus is on the demand side of the equation: where might these metals be used in a year, or in ten years or more? The near term offers some certainty. Although there is much talk of the impact of inflation and higher interest rates, Covid-19 and possible recessions, there is a certain degree of decoupling of demand for these metals from simple measures of economic output such as gross domestic product. As such, recent pricing seems to incorporate a view of modestly slowing demand already in prices that are lower than they were at the start of 2022.
If previous performance in economic downturns is any guide, then industrial demand for these metals, including platinum, could fall. But, for an automotive sector with low inventory, previously constrained by chip shortages and with long waiting times, a rise in demand for vehicles and for the platinum group metals used in these same vehicles is quite plausible.
If previous performance in economic downturns is any guide, then industrial demand for these metals, including platinum, could fall.
Beyond that, much of the platinum group metals discussion focuses on two issues: the downside potential for PGM demand of battery electric vehicles displacing the internal combustion engine (ICE) vehicle and its catalytic converters, and the potential of growth in PGM demand from the nascent hydrogen economy.
Looking at the former, the growth of battery vehicle sales to date has been impressive, albeit from low initial levels, particularly if one ignores the false start of battery vehicle sales in the early 21st century. Most sector commentators see substantial further growth throughout this decade and beyond. But there are questions concerning how fast and how far this move can or should go.
Current expectations are that a battery vehicle could have more embodied carbon content (a good proxy for its environmental harm) than a conventional ICE vehicle. However, it seems clear that its in-use carbon load (from the generation, storage and distribution of power, as opposed to the refining, distribution and combustion of gasoline or diesel in today’s ICEs) can often be noticeably lower than for a conventional vehicle.
In our view, it may make carbon sense to electrify many vehicles — but it may not make sense to do so in every case simply from a carbon perspective. Add in varying use cases, the different cleanliness levels of various electricity grids and the potential for biofuels, and it seems likely that ICEs will continue to play an important role in mobility, with PGMs playing a vital role in cleaning their emissions.
This article, though, is being written in the immediate aftermath of the UK’s first-ever recorded temperatures in excess of 40 degrees Celsius. We are now witnessing a serious move around the globe to consider whether carbon emissions can be reduced and demands for the world to meet net zero and limit warming to two degrees. This should lead to a wholesale introduction of lower carbon technology.
This seems to be leading to an understanding that other tools, beyond battery electric vehicles, will be needed. Here, hydrogen seems set to play a role not as an energy source (other than in the sun’s fusion processes that support all life on earth) but as an energy vector and as a way to store and transport this energy. Passing hydrogen through pipelines could help us to decarbonise domestic heating in many countries, and storing hydrogen could help lower the cost of renewables.
Platinum, and its sister metals such as ruthenium and iridium, seem easily the most likely candidates to enable hydrogen’s production through electrolysis and its use in fuel cells, in the automotive sector and elsewhere, with high growth rates potentially out there for this sector of PGM demand for an extended period.
South Africa, Platinum Mogalakwena nuGen Hydrogen Truck, Launch Event, 6 May 2022. Photographer Hush Naidoo . © Anglo American
MUCH OF THE WORLD’S FOCUS IS ON THE DEMAND SIDE OF THE EQUATION: WHERE MIGHT THESE METALS BE IN A YEAR OR IN TEN YEARS OR MORE? THE NEAR TERM OFFERS SOME CERTAINTY
Forecasting demand gained or lost from electrification or hydrogen, a known unknown, may be challenging, but it is possible to build scenarios of how the future could look. The unknown unknowns, however, are of more interest. What new uses could be found for the platinum group metals, and how should we approach this? Looking back to the 1970s, nobody intrinsically knew that platinum would work well in catalytic converters.
However, they did know that its varying oxidation states and their stability made it a good catalyst in oil refining and elsewhere. It seemed reasonable for scientists to look at these benefits and try to apply them in what subsequently became the largest demand sector for these metals: the automotive catalytic converter.
If we are to forecast where new demand is to come from – and the lesson of the last century is that new applications for these metals will develop – it makes sense to ask what they are good at.
[image: Platinum Hyundai Hydrogen Fuel Cell Electric Vehicle. Photographed in Millbrook and Rainham, UK. 11-12 November 2020. Photographer Greg Pajo. © Anglo American]
Chemistry Contains Key for Future Uses
PGMs have numerous oxidation states. They are often stable in various forms, mechanically strong, durable, thermally resistant and often corrosion resistant, and they have well-understood coordination chemistry (how their compounds are shaped).
In an energy-efficient world, the ability to operate at higher temperatures for an extended period of time is likely to see PGMs used in new areas. The ability of scientists to tune their coordination chemistry allows similar tuning of their electronic and biochemical behaviour, making new uses in both these sectors highly likely.
Work is even underway on trying to incorporate them into lithium batteries to benefit from their electrochemical properties, perhaps extending the lifetime or range of battery vehicles. It is (fortunately) beyond the scope of this article to say what these new applications could be and how large demand from each could be. But it is clear that these metals will continue to play an important role in modern life, underpinning clean chemistry, lower emissions and energy transformation. How they might do this is to an extent unknowable — but it is entirely imaginable.
FORECASTING DEMAND GAINED OR LOST FROM ELECTRIFICATION OR HYDROGEN, A KNOWN UNKNOWN, MAY BE CHALLENGING, BUT IT IS POSSIBLE TO BUILD SCENARIOS OF HOW THE FUTURE COULD LOOK.