The minor platinum group metals (PGMs) including iridium and ruthenium, formerly seen as mere by-products to platinum mining, are now at the forefront of PGM producers’ minds as the hydrogen economy develops, says Heraeus Precious Metals, one of the world’s largest PGM refiners. Compiled by CHANTELLE KOTZE.
South Africa’s UG2 reef, which contains the highest proportion of ruthenium and iridium of any other ore body worldwide, accounting for 81% and 87% of global production in 2020, respectively, is closely aligned to future PGM demand.
Ruthenium and iridium, with traditional end-uses in niche industries, have seen steep price gains early this year, driven by robust industrial buying, disruptions to South African supply and rising investor awareness of the potential for PGMs’ use in hydrogen applications.
In the hydrogen sector, through their co-use with platinum, ruthenium is used in polymer electrolyte membrane (PEM) fuel cells for mobility applications, while iridium is used in hydrogen production via PEM electrolysis – in which water is electrochemically split into hydrogen and oxygen. Despite ongoing innovation to reduce the intensity of PGM use, these metals are hard to replace entirely and are vital in certain technologies, Heraeus Precious Metals says.
In its 2021 Platinum Standard report published in May in partnership with PGMs consultancy SFA Oxford, Heraeus Precious Metals said that the current outlook for iridium and ruthenium supply sees mine output peak in 2022 before depletion begins to take effect. In order to support long-term demand, driven by the burgeoning hydrogen economy, significant growth in supply is needed to keep pace with consumption by industrial end users.
Heraeus Precious Metals notes the importance of producers working in conjunction with end-users to ensure that the future PGM demand ratios are in alignment with planned production. This reduces price volatility and will provide confidence to end-users adopting these precious metals for the long term, the PGM refiner says.
According to analysts Francesca Price and Alex Biddle from SFA Oxford, the metal supply ratio of the UG2 reef is best placed to meet future hydrogen demand, owing to its higher weighting towards iridium and ruthenium than current supply from South Africa.
The strength of the UG2 basket price is motivating producers to invest in replacement projects to extend the life of mines and keep high-cost operations open for longer. Previously uneconomic areas of shafts are now viable under current basket prices, lifting UG2 supply projections in the near-term, particularly for mature ruthenium and iridium-rich operations.
Sibanye-Stillwater, the world’s largest primary producer of platinum and second largest primary producer of palladium decided to restart its K4 shaft, which it acquired from Lonmin, while PGM producer Impala Platinum and diversified miner African Rainbow Minerals announced the Two Rivers Merensky project. Moreover, PGM miner Anglo American Platinum is likely to invest in Der Brochen to extend Mototolo’s mine life.
“Now that revenue is led by the UG2 basket price, rhodium and palladium are the main drivers for the future of the industry, with increasing influence from iridium and ruthenium as well, the analysts said in the report.
Platinum remains in surplus
According to Heraeus Precious Metals, the industrial platinum market surplus is predicted to widen to more than 1.5 Moz this year (excluding investment) as supply rebounds more than demand. A year without significant mine shutdowns plus additional supply from processing stockpiles could lift global refined platinum production by 1.6 Moz, the PGM refiner says.
While record investor demand for platinum in 2020 absorbed most of the industrial surplus, record investment demand will be needed to balance the market in 2021. However, with a higher platinum price predicted this year, investment demand may not be as high as in 2020.
This year, Heraeus Precious Metals predicts autocatalyst demand to make the largest contribution to platinum consumption growth, gaining 710 000 oz to 3 Moz.
The growth will be driven by recovering vehicle sales post COVID-19, and higher platinum loadings to meet stricter heavy-duty vehicle emission standards in China and India, as a result of the first full year of Bharat VI regulations in India and the introduction of China VI emissions standards in July.