Platinum Group Metals PGM or PGE for emissions reductions

Platinum group metals or PGMs are essential metals in the modern world, but until recently they’ve been an obscure investment in the Australian market. The platinum group metals (PGM) include platinum, palladium, rhodium, ruthenium, iridium, and osmium. These metals have similar physical and chemical properties and occur together in nature. The major three in platinum, palladium and rhodium, are prized for their catalytic qualities.

PGM versus PGE

PGE or platinum group metals are interchangeable also known as PGE, platinum group elements. They are “noble metals”. They are considered noble because they demonstrate outstanding resistance to chemical attack even at high temperatures – other noble metals include gold and silver. E.g. platinum has an extremely high melting point at 1768°C / 3215°F

Use of Platinum Group Metals

Most know of platinum in jewellery or investment, but an equal amount is used in autocatalytic converters.

Platinum group metals use of platinum — Use of Platinum source. https://newagemetals.com/platinum-fundamentals-and-its-role-for-a-greener-future/

According to SFA Oxford, new platinum demand from hydrogen power will total more than 400,000 ounces by 2030 from the demand of less than 50,000 oz of platinum production today. Bosch in 2019 reduced platinum use in hydrogen fuel cells by a factor of 10.

PGM in Catalytic Converters

Platinum, palladium and rhodium are key components in the fuel efficiency converters that help vehicles with internal combustion engines follow modern emissions standards. Increasing emissions standards will drive up demand. Platinum is better suited for treating vehicle emissions from diesel, while vehicles that run using gasoline primarily utilize palladium.

PGM has gone from Obscurity to Fame

Most people know platinum in jewellery but the industrial uses of platinum, mines and markets are misunderstood, especially in Australia.

Chalice Mining (ASX:CHN) shot to fame by making the first major PGM discovery, the palladium rich Julimar project 70km north of Perth in 2020, inspiring a rush of explorers into the district and commodity class.
New applications linked to the green energy transition have emerged, including the role of PGEs in fuel cells and electrolysers that use renewable energy to convert water into so-called “green hydrogen”.
Russia dominates the world palladium market
- Production of 40% of the world’s mined palladium
- South Africa close behind and a big gap to third place.
Russia incurred sanctions and boycotts with its invasion of Ukraine on February 24, and palladium prices rose to all time highs of US$3500/oz on supply fears.

Platinum

There is not a shortage of platinum, and the price is about US$1100/oz.

Platinum is typically the metal of choice in diesel cars
Investment asset and in jewellery.
Used in fuel cells. Demand will increase significantly in the coming years.

Palladium

Demand for palladium and its sister metal rhodium are from standard gasoline cars.
Bulk sold to makers of catalytic converters.
Annual global demand
- Palladium ~ 10.5Moz
- Platinum 7.5Moz
- Rhodium 1.2Moz (trading in excess of US$20,000/oz)
Palladium demand may increase to rise 700,000oz, and a 12% increase in rhodium, due to a rebound in auto production after semiconductor shortages curbed the industry’s productivity in 2021.
Historically palladium was a lower value metal and when platinum price hit all time highs above US$2000/oz in 2008 palladium was fetching less than US$500/oz
As emissions standards became stricter carmakers substituted palladium for the more expensive platinum in catalytic converters

South Africa And Russia Dominate Supply

Primary producers are Russia and South Africa and combined, produce 80% of supply. Palladium is a by product of platinum (SA) or nickel mines (Russia)

South Africa Bushveld Complex

South Africa accounts for 70% of platinum global production
Bushveld is the largest source of magmatic ores in world
Area = 66,000km2 of igneous rocks formed 2.1 billion years ago.
The largest global source of platinum (75%) and palladium (50%) ore
- 7Moz of palladium annually
- 6Moz of platinum
- 700,000oz-800,000Moz rhodium
- Catalyst recycling making up a large part of the shortfall.

Russia / Ukraine

Russian is 2nd largest producer of palladium (40%)
Even before the Russian invasion of Ukraine, the market was looking at supply shortages from 2023 onwards.
A large % of Russian palladium goes to China.
The Ukraine events will create a gap for the 50% potential shortfall.

PGM / PGE Companies on ASX and Canada

For details check out Stockhead or other commentators on companies.