Indaba, PGMs: Roskill On the road… at Investec in Cape Town

On the road… Cape Town 2020

Platinum group metal (PGM) producers, traders and consumers gathered at Investec’s annual PGM dialogue at the Cape Town Mining Indaba to discuss the accelerated price rises in palladium and rhodium and the sustainability of the industry over the 2020s. The PGM group then joined Roskill at its third On the Road… Cape Town event, hosted at Investec, to listen to the latest EV forecasts and raw material requirements, together with the battery and drivetrain raw material industry.

South African PGM producers emphasised the fundamentals that underpin the metal prices with supply of palladium and rhodium remaining in deficit to demand from emission control auto catalysts. Downstream catalyst manufacturers reiterated the slow-moving nature of technologies in automotive OEMs, with catalyst technologies designed for certain models. Any change in composition and design requires lengthy and costly licencing per region of application and as a result, car manufacturers are unlikely to change technologies quickly.

The underlying imbalance sits with the natural platinum, palladium and rhodium ratios in ores, with platinum making up the main revenue base for South African PGM producers. The PGM miners are calling for collaboration with downstream industries to help build a sustainable supply-demand balance, stating that “platinum is the solution”. However, OEMs have now turned their R&D focus to improving EV platforms, with little to none available to address a potential platinum-rich combustion engine catalyst.

While PGM producers are closely following EV penetration rate forecasts, the industry is also closely tracking developments in the chromium industry. By-product chromium output is growing fast from South African producers with access to UG2 reserves, which also has more favourable palladium and rhodium contents per ounce of platinum compared to the Merensky reef. While chromium revenues only began to support a struggling PGM industry just a few years ago, the industry has woken up to a diversification to supply in another major downstream industry, stainless steel.

Nevertheless, ongoing headwinds lay ahead for South African PGM producers as structural changes are faced by both the automotive and steel industries. Roskill forecasts a peak steel output in China over the 2020s as the industry matures, which has already resulted in annual stainless steel growth falling to below 5% in 2019. This is on top of growing electricity concerns in South Africa, with Eskom moving its load shedding to Stage 6 (removing 6GW from the national grid) in December 2019 and causing underground mines to suspend operations. According to operators, underground mines have been able to operate safely up until Stage 4 load shedding by curtailing surface requirements.

Turning back to platinum, Anglo American Platinum may be kickstarting its own demand for this metal in the form of fuel cell technology. In October last year, the company announced it was looking to develop a fuel cell truck for its mines. The first hydrogen-powered 350t truck is expected this year, followed by a trial at Anglo American’s Mogalakwena mine. While Roskill does not see fuel cell technology competing with lithium-ion batteries for passenger EVs over the 2020s, fixed-route transport has already seen growing attention for hydrogen fuel cells in electric buses.

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This article was written by Nils Backeberg. Please get in touch below if you wish to discuss further:

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