Platinum group metals (PGMs) — platinum, palladium, rhodium, iridium, ruthenium and osmium — are highly valued for their wide range of industrial, medical, and electronic applications.
But the biggest demand sector for PGMs is ‘auto catalysts’ in car exhausts which reduce polluting emissions in ICE and hybrid vehicles.
These auto catalysts, or catalytic convertors, account for 40% and 80% of annual platinum and palladium production, respectively.
Electrification of transport — which is zero emission — threatens to put a huge dent in PGM demand, with legacy car makers like Volkswagen, BMW and Ford announcing plans to phase out ICE vehicle production quicker than expected.
But these big carmakers are quick to caution that this will not happen overnight, says precious metals analysts at Metals Focus.
“Moreover, as the big automakers restructure and change their core business functions, ‘hybridisation’ will remain a crucial part of their electrification strategy and an important stepping stone to their transition to fully electric power-trains,” they say.
“Due to hybrid vehicle engines having to frequently stop and re-start, resulting in after-treatment systems operating at lower temperatures, PGM loadings are often higher than for the equivalent ICE vehicle.”
In 2021, the automotive industry will consume more PGMs than it did in 2019, even as global vehicle sales do not quite return to pre-pandemic levels:
Why? In China, the new ‘China 6 standard’ — designed to reduce car emissions — requires the addition of a gasoline particulate filter (GPF). Most particulate filters are coated with a PGM solution.
“As close to 90% of passenger vehicles sold are now China 6 compliant, the country is set to consume 3Moz this year, up 13% in 2020 and close to a third more metal than consumed in 2019,” Metals Focus says.
In North America, light vehicle production is expected to increase by 25%, with 96% of this growth coming from ICE or hybrid vehicles, supporting 27% growth in PGM demand.
In Europe, mild and full hybrid vehicle production in 2021 will almost double, growing by 90% compared to BEV production growth of 75%, Metals Focus says.
“Given the high prevalence of fossil-fuelled car production and the threat of penalties eroding profits, European OEMs continue to pursue emissions abatement strategies that favour higher PGM loadings,” it says.
“Consequently, Europe will need 470koz more PGMs in 2021 to ensure that the stringent emissions standards are met. This represents an increase of 18% compared to 2020.”