All About Platinum

Platinum, palladium, rhodium, iridium, ruthenium and osmium are known as the platinum group elements or metals (PGE or PGM). These metals are distinguished by their superior conductivity and ductility, resistance to oxidation and corrosion, their strength and durability, strong catalytic properties and high melting points.

These unique properties have been the reason for PGE's being called the designated "noble metals" on the periodic table of elements. Platinum and palladium have the greatest economic importance and are found in the largest quantities; the other four are produced as by-products of platinum and palladium mining. They are among the least abundant of the Earth's elements.

The single biggest use for platinum and palladium is in the catalytic converter used in automobiles to reduce the pollutants of exhaust gases. Platinum is used to reduce the emissions in diesel-powered vehicles whereas palladium is used more in gasoline-powered cars. Platinum and palladium are also used in oil refining, glassmaking, medical instruments, electronics, dentistry, jewellery and many other applications. The increase capacity of CR-ROMS and hard drives in computers is largely the results of the increase in use of platinum in these components. The most important future use of platinum may be in the manufacture of fuel cells.

Specifically, others in this group are used as follows:

Rhodium, the whitest of the platinum metals, makes it widely used as an electroplate in applications ranging from the finishing of jewellery to the production of the 60-inch search light reflectors. Rhodium has useful catalytic properties that have been found suitable for electrical contacts, and is particularly useful as an electroplated surface on rubbing electrical contacts. Pure rhodium, as well as pure iridium crucibles, are used in growing crystals for laser and related applications.

Iridium, the most corrosion-resistant of the platinum group, is a very effective hardener for platinum and has an extremely high melting point. Iridium has outstanding resistance to lead compounds at high temperatures , one of the reasons for its use in the ultra long life spark plugs.

Ruthenium is also a good hardener for platinum, often used for contacts in voltage regulators, thermostats and magnetos. It is used to harden platinum, and particularly palladium, for use in jewellery.

Osmium is the rarest and hardest of the group and has the highest melting point, but its ready oxidation is a limitation. It has been used in the synthesis of cortisone.

Platinum: Supply and Demand

Of the six metals in the platinum group, platinum itself is the most sought-after. Although a precious metal, and hence used as both jewellery and for investment purposes, its use in industry accounts for 0ver 70% of platinum demand. In other words, its value is that of a precious metal but otherwise it behaves like any other commodity where the interaction between supply and demand determines its price. The result is a less erratic and more predictable price for the metal.

The demand for platinum has steadily increased over the past decade generally at a slightly greater rate then supply could support. The result has been a progressive increase in the price of platinum, hitting a 25 year high in April 2004 of US$937/troy oz. Johnson Matthey, the world’s principal source of information on PGMs, expects platinum to continue to trade between US $830 and US$930/troy oz for the next six months. As the chart below shows, platinum has out performed gold the past few years.

Where is the demand for platinum coming from?

The biggest single industrial use of platinum is in catalytic converters in cars and trucks – particularly those powered by diesel. A catalytic converter is part of the exhaust system of vehicles that helps clean the exhaust prior to release into the atmosphere. With stricter environmental regulations being phased in around the world, restricting the amount of Particulate Matter (PM), Nitrous Oxide (NOx) and Hydrocarbon (HC) emission from cars, auto manufacturers are having to use more platinum in the catalytic converter to meet these requirements. In certain instances platinum can be substituted by palladium in gasoline powered vehicles but this is not the case for diesel cars and trucks. The number of diesel-powered cars on the road in Europe has doubled in the last ten years from about 22% to 46% of all vehicles. This has put a further demand on platinum.


Where is the supply of platinum coming from?

The largest PGE deposits in the world are found in the Bushveld Complex in South Africa and, in the Noril’sk Complex in Russia. The PGMs in the Bushveld are generally dominated by platinum and occur in association with chrome and lesser amounts of nickel and copper. The Noril’sk deposit is dominated by palladium and is associated with high concentrations of nickel and copper. There are only two “stand-alone” PGM mines in North America – the Stillwater Complex in Montana and Lac des Iles near Thunder Bay, Ontario both of which are dominated by palladium. But as of yet there is no platinum mine in North America. Currently South Africa produces 77% of the world’s platinum followed by Russia, North America and Zimbabwe with 13%, 6% and 4% of the market.

The past five years the demand for platinum has outstripped supply with the resulting increase in price. The planned expansion and development of several mines in South Africa and Zimbabwe will barely meet demand in the coming years and by 2010 platinum supply is predicted to be in a deficit again. Furthermore due to political instability in some of these regions, together with increased mining costs, it is possible that the anticipated production rates may not be met.