Despite the slowdown in the automotive sector, the
race across the globe to implement more-stringent emissions
regulations has created an opportunity to increase the use of
platinum group metals (PGMs) in catalytic converters. The
outcome in the United States, however, could be very different
than in Europe.
Auto catalysts typically use a ceramic or stainless
steel honeycombed substrate with catalysts such as platinum,
palladium and rhodium to remove toxic emissions from an
internal combustion engine. Gasoline auto catalysts mostly
utilize palladium in combination with rhodium, while diesel
catalysts largely use platinum. This means that in Europe,
where diesel cars are more prevalent, more platinum is used,
while palladium is the metal of choice in the United States,
where gasoline is the standard fuel.
Virtually all forecasts see a softening in vehicle
demand in 2009, but auto catalyst producers hold an important
trump card, according to David Jollie, precious metals market
analyst and publications manager at catalytic converter
producer Johnson Matthey Plc. In addition to improving the
environment, new emissions standards should lead to the use of
more industrial precious metals in the automotive industry.
"(New emissions standards) will go a long way toward cushioning
some of the softness in the (auto catalyst) market," he said in
a telephone interview from the company's London office.
In the European Union, the next generation of
emissions standards, commonly known as Euro 5, are scheduled to
be implemented later this year. The law places caps on
pollutants from diesel and gasoline cars, limiting nitrogen
oxides and particulate matter.
"For gasoline cars it's really a tightening (of the
standards). You will still have three-way catalysts, which are
largely palladium and rhodium, but new models will tend to have
higher (platinum group metal) loads in order to meet the new
regulations," Jollie said.
On the diesel side, most vehicles will be equipped
with diesel particulate filters in addition to platinum or
platinum/palladium diesel oxidation catalysts. "Probably about
40 or 50 percent of light vehicles already have a diesel
particulate filter, but that number is going to rise this year
in order to meet the (new) legislation. Currently people are
installing these for tax reasons or environmental reasons, but
as we move toward Euro 5 being implemented it will be much more
of a legislation-driven push," he said.
This will be a positive trend for platinum because
diesel particulate filters are platinum-rich, Jollie said,
although increasingly palladium also is being used alongside
platinum in more-advanced diesel technology. "We still expect
demand in Europe to fall for auto catalysts, but things will be
tempered by this new Euro 5 legislation," he added.
In 2008, European auto catalyst demand for platinum
rose 16.2 percent to 2.4 million troy ounces despite Western
European vehicle production falling about 2.4 percent to 15.8
million units, according to Johnson Matthey.
One growth region is China, which is phasing in
more-rigorous emissions standards. The new law, which is
analogous to Euro 4, will go into effect nationwide next
January for heavy-duty vehicles and six months later for
light-duty vehicles. "Essentially what you have right now in
China is Euro 3 nationwide. That has been introduced fairly
recently. They are trying to address the areas with the worst
pollution, where they are currently introducing Euro 4, which
is Europe's current stage," Jollie said. "(Euro 4) has already
been implemented in Beijing and Shanghai. It's going to be
introduced sequentially into the big cities and eventually
nationwide. It's hard for them to meet these standards without
high-quality fuel, but they are tightening standards."
The impact of the new laws is that every new
passenger vehicle in China should now be equipped with an auto
catalyst. "Even though car engines are smaller than they are in
the United States there is still (a) strong growth story, but
it's mostly a palladium/rhodium growth story because it's a
gasoline market." Chinese palladium purchases by the auto
catalyst sector last year jumped 59 percent from 2007 to a
record 410,000 ounces.
The story in the United States is a little more
complex. There are currently two sets of relevant emissions
regulations-federal standards and stricter California
President Obama has directed federal regulators to
approve an application by California and 13 other states to set
strict auto emissions and fuel efficiency standards. The
California rules will result in higher palladium and rhodium
use in auto catalysts, although not nearly as much as in
Europe, where emissions standards are already higher, Jollie
said. "The PGMs will rise a little bit, but then the
(manufacturers) will thrift them back down," he said. "They
(platinum group metals) levels won't change (in the United
States) as much as you might think." A slowdown in U.S. auto
production could have a much greater negative impact on
platinum group metals use in auto catalysts than any benefit
gained by tighter emissions standards, he added. North American
automotive palladium demand fell by an estimated 20.6 percent
last year to 1.35 million ounces and is expected to suffer
greater losses in 2009.
But while new emissions standards will be a
positive for platinum group metals use, the introduction of
technology that thrifts precious metals could be a negative.
Mazda Motor Corp., for example, said it has developed a new
technology for auto catalytic converters that uses roughly 70
percent less precious metals than previously.
The new nanocatalyst will be introduced first in
the Mazda3 going on sale around the world this year. It
requires just 0.15 grams per liter of precious metals vs. 0.55
g/L in the previous model. Going forward, the Japanese
automaker said it will progressively introduce the single
nanocatalyst to all its global markets, "which will contribute
to a reduction in the consumption of rare metals and cleaner
vehicle exhaust emissions."
There have been many technological breakthroughs in
the past decade that claim to reduce platinum group metals use,
but most haven't gained traction because they haven't proven
cost effective to implement on an industry-wide scale, Jollie
said. "We've looked at (the Mazda) announcement. What they said
is really a reflection of what is going on anyway. There's a
constant drive to reduce precious metal costs. Personally, I
don't think the Mazda technology marks a quantum leap forward.
It's just part of the general trend of people trying to
minimize PGM loadings."
A spokesman for South African miner Impala Platinum
Holdings Ltd. said platinum group metals use shouldn't suffer
significantly due to the introduction of Mazda's new single
nanocatalyst. Tom Jennemann