Demand for green cars and hydrogen will determine outlook for PGMs

If hydrogen develops along its projected growth path it could be positive for platinum demand in the long run.

But a corresponding decline in autocatalyst demand from the automotive industry could offset the gains from hydrogen, resulting in flatline growth for platinum group metals (PGMs) over the next 30 years.

From 2025, unless new projects commence, mine depletion means that primary platinum supply will contract and secondary supply from recycling would be insufficient to avoid a deficit by 2050.

According to Stephen Forrest, chair of the consultancy SFA Oxford, who spoke at the PGMs Industry Day, a platinum group metals mining conference in Johannesburg, the urgency to address global warming through decarbonisation would be one of the important trends to affect demand for PGMs over the next three decades.

Demand for platinum, palladium, iridium and ruthenium would rely on the rate of uptake of green hydrogen as a replacement for existing grey hydrogen application, and in the longer term by the development of hydrogen fuel cell technology — both these technologies require platinum to be used as a catalyst.

While grey hydrogen is produced using fossil fuels, green hydrogen is a hydrogen fuel produced using renewable energy, such as solar. 

According to Forrest, to remain within the 1.5˚C global warming limit the world must be net carbon neutral by 2050, which would require the phasing out of combustion engines in the automotive industry.

In the short term, automotive emissions legislation was expected to remain positive for PGMs, given that tightening emissions standards would be key to the continued acceptance of the internal combustion engine and hence the use of PGMs in the manufacture of autocatalysts that convert pollutants in exhaust fumes into harmless gases.

“In mid- to late 2020s the catch-up in emissions standards in some of the less well-developed regions would offer some cushioning for PGM-based autocatalysts against the migration from conventional cars towards electric vehicles,” he said.

In the next decade the overall number of combustion vehicles built was forecast to increase with corresponding growth in PGMs demand. This would change, however, in the 2030s and 2040s with only modest light vehicle production growth and combustion engine growth continuing to lose share to electric vehicles, leading to a decrease in PGM-based autocatalyst demand.

Ultimately, electric cars are set to displace conventional cars whose autocatalysts represent PGMs greatest end use, said Forrest. But there was uncertainty about the rate and speed of penetration of electric vehicles. There could be a long period during which hybrid vehicle manufacturing would support demand for PGMs.

The development of the hydrogen economy played an important part in the drive to decarbonise global energy use. Over the next decade the development of this type of technology was expected to grow slowly — not becoming significant until the late 2030s. In the long term, most of the demand was predicted to come from hydrogen fuel cell vehicles.

Platinum, ruthenium and iridium are critical in the production of hydrogen and fuel cells, but ruthenium and iridium are not at the forefront of mine planning, which raised the risk of supply deficits of these metals in the future.

In 2040 the platinum market was predicted to move into a widening deficit because of declining primary and secondary supply, alongside increasing demand from the hydrogen sector.

However, there was a risk that the development of hydrogen economy could progress slower than predicted, said Forrest.

From 2040 to 2050, the demand for PGMs from the hydrogen industry will rise faster while the primary and secondary supply of metals falls, indicating that if hydrogen demand was lower than anticipated the platinum market could still be in deficit by 2050.

erasmusd@businesslive.co.za