Monday, 21 January 2013

Platinum group metals, a story of scarcity and industrial needs

Among precious metals, platinum deserves special attention because of several of its characteristics. Unlike gold or silver, platinum is an extremely hard metal, with high wear resistance. Alloying platinum with gold makes the alloy more malleable.  Platinum is denser than gold and has with 21.45 g/cm³ over twice the density of silver. It melts at a higher temperature (1768.3 °C or 2041.4 K) than silver or gold.  Unlike silver and palladium[1] and similar to gold, platinum is not corroded in any normal environment.
(With graphs updated as of Jan 5, 2017)

Scarcity

In Mendeleyev's table, you may recall from chemistry courses, elements with similar chemical characteristics usually are found in columns. From lighter to heavier, one of those columns includes copper, silver and gold. Somewhat unlike most elements, the triads or transition elements include metals with similar characteristics in three adjacent columns of the same period. Moreover the successive periods also have interrelated characteristics.  Those triad elements are Ruthenium, Rhodium and Palladium (the elements with atomic number preceding silver) and Osmium, Iridium and Platinum (the three precious metals with atomic number preceding gold). Unlike the first triad elements (the ubiquitous iron, and the fairly common base metals cobalt and nickel); the precious metals of the following periods are extremely rare in the earth's crust.  They even are rarer than gold, as illustrated in following picture, you can find on Wikipedia.  Abundances of elements are indicated relative to silicon in parts per million silicon atoms.  Apart from oxygen, bound in most rocks, silicon is the most ubiquitous element in the earth's crust. The left axis is logarithmic, implying that from top to bottom, each major gradation indicates a thousand fold increase of scarcity.  If 'rare earths' are over 10,000 to over a million times rarer than silicon, gold is about a billion times rarer and iridium is over 100 billion times rarer than silicon.

 Abundances of elements relative to silicon in parts per million silicon atoms.

Volcanic activity bringing about element concentration

Relative scarcity is only one point. The concentration of elements in the earth's crust, brought about by volcanic activity, is the next big chapter in determining whether metals can economically be exploited.  In this perspective it is necessary to make a clear distinction between felsic and mafic or ultra-mafic rocks.  The former predominantly contain silicon and aluminium; they are the most common and generally are light coloured. (If you can spare an hour of your time, it's worth listening to and watching this presentation of Sprott Global University).  Mafic and ultramafic rocks result from magma intrusions containing more elements from the deeper earth mantle and molten outer core.  These minerals are richer in magnesium and iron and usually crystallize as black or dark green rocks.

Often those mafic and ultramafic rocks are rich in sulphur, much of which is absorbed as the magma is pushed upwards to the magma chamber underneath any active volcano.   Unlike gold, platinum group elements (PGE's) are found in the body of mafic/ultramafic magma intrusions, often combined with chromite.

Generally, a phase diagram used for any controlled chemical reaction, may tell you exactly what material or alloy is going to crystallize under any given condition of chemical composition of the solution, pressure and temperature. Phase diagrams cannot be drawn for the unknown combinations of elements in magma chambers most often miles deep. However, by analogy it is likely that small changes in magma composition, temperature and pressure may yield sudden crystallization of PGE's from the melt.  PGE's are found in often extended but very thin layers.  The best examples are the Bushveld complex in South Africa, the Great Dyke in Zimbabwe and the Stillwater complex (in Montana, US).  The two African sources are rich in platinum relative to palladium.  The Stillwater complex is richer in palladium, making its ore less valuable.

Prospection

Copper / nickel massive sulphide complexes, often found jointly and in high concentration in mafic/ultramafic rocks, are searched for by airborne magnetic surveys, followed up by the study of electromagnetic & gravity anomalies.  Target drilling comes only at the last stage. The approach for finding PGE's, often in combination with Chromite layers, is following a similar approach with a follow up mapping of geochemistry to guide later drilling. Gravity anomalies are of less importance considering the rather low concentrations of PGE's and the tiny fraction of mafic host rock potentially containing any of it.

When compared to gold, PGE's are most often found in rather deep layers on a much more limited number of locations identified throughout the world. This makes mining for PGE's a rather expensive operation and the prospection for and development of new resources an even more cumbersome endeavour.  High chromite concentrations as the -often only- important secondary metal, may contribute in making the PGE exploitation economically feasible. It also helps that the deeply buried PGE reserves often have grades ranging up to 10 g/tonne (in the Bush veld complex). The main producers of PGE's are South Africa (accounting for about 75 % of the global output), Zimbabwe, Russia, Canada and the US. The total annual production was 192 tonne in 2010 or less than 8 % of the world gold output of 2,700 tonne (2011).

Gold and Platinum price evolution in the 21st century.

The below graph quickly reveals the essential about the platinum price evolution. When compared to gold, platinum prices evolve much more volatile than does gold. Unlike gold and silver, platinum never played any significant role as a monetary metal. Investment demand is relatively recent and marginal as compared to silver or gold. This makes platinum above all a precious metal with an almost exclusively industrial use.

Gold and Platinum price (London AM fix) in USD/Oz since the beginning of the 21st century - graph (click for maximum enlargement)
Best known are the catalytic exhaust filters, used in cars. Relatively important platinum and/or palladium quantities in such catalytic convertors is what makes them the main resource for PGE recuperation, which is a rather profitable business (much less risky than mining).

Platinum price in USD/Oz on the left scale and the Gold to Platinum ratio (on the right scale) from 2000 onwards (click for maximum enlargement)
The more volatile platinum price is best illustrated when showing the Gold-to-platinum ratio (GPR). On the above graph you find the GPR as the blue graph marked on the right scale, together with the platinum price (in USD/Oz on the left scale). The GPR shows two distinct bottoms: late 2000 to 2001 and late 2007 to 2008. Both mark the end of a business cycle, with increasing demand driving up the prices of raw materials (and crude). The 2008 financial crisis has proven to be a game change for the GPR, which jumped up from a minimum just above 0.4 to close to 1. Platinum lost far more of its value than did gold during those hectic months. For the first time platinum quoted at parity to gold. During the 2009-2010 economic recovery, Platinum firmed and the GPR eased to a lower level, however without approaching its previous 'normal' range between 0.4 and 0.6.

detailed graph of the recent GPR action is shown below:

Platinum price in USD/Oz on the left scale and the Gold to Platinum ratio (on the right scale) since 2011
(click for maximum enlargement)
The threat of more economic troubles ahead, with the sovereign debt crisis escalating in 2011, caused a very atypical move of the GPR, rising to above 1 with platinum now less expensive than gold over a longer time frame. Gold benefited from a lasting safe haven demand as confidence in the monetary system started vacillating as a result of unsustainable public deficits and QE by major central banks. Rising doubts on the perspective of future automotive demand burdened the sentiment on PGE's and only the low above ground metal stocks could avoid a further slide. The supply disruption as a result of the strike and violent protest at Lonmin's Marikana mine caused the Gold-to-platinum ratio to only temporarily regain parity in August 2012. This is remarkable considering the tight platinum supply. By mid January 2013, the platinum price ultimately has been rising more rapidly than did the gold price, driving the GPR briefly down to 1 during January 2013.

(Updated:) Both in January and by end May 2014, the GPR has been testing a bottom of 0.85, failing however to break below. From September 2014 onward, after the German economy seemed at the brink of a new recession, platinum sold off more than gold. Despite much lower gold prices, the GPR once more was threatening to return to 1. As gold temprarily recovered early 2015, platinum was unable to catch up. The GPR broke above 1 on Jan 15, 2015. The gold sell-off in March only brought more hardship for Platinum with any recovery failing. Platinum permanently slid below $1100 on June 04 and further slid below $1000 since July 17. 

Early autumn 2015, the actual divergence between platinum and palladium was striking, with the latter rallying, which seemingly also was provoking a short squeeze. The speculators' take on the falsification of emission test results for diesel engines by VW is to short platinum (used as catalysor for these engines) and go long palladium (only used as catalysor in gasoline engines).

With Platinum plunging to a new post 2009 low at $931 on Sep 23, 2015, the GPR is escalating above 1.2. Finally on Jan 21, 2016 platinum slid to a fresh low at $814, with the GPR at an all time high of 1.345, before starting its current recovery. With gold also in an uptrend, there is only little relief for the GPR, making a temporary low at 1.16 in August 2016. As gold weakened during autumn 2016, platinum once more was hit hard, with the GPR now peaking at 1.36.

A new article: A case for the 'white precious metals'  provides additional graphs on platinum, palladium and silver relative to gold.

Demand considerations

Some industrial applications less correlated with the automotive industry may spur platinum demand.  Many of those require tiny quantities, making platinum recuperation less evident.  Some potential applications such as in fuel cells (converting hydrogen gas and oxygen to electricity) may immobilize considerable amounts of platinum over their longer life time span.  As the world is running low on affordable crude, fuel cells may eventually turn to be a viable alternative to heavy and also expensive nickel metal-hydride or lithium rechargeable power supplies in electric or hybrid vehicles.

Footnote:

[1] As you most likely know, silver is blackened by sulphur traces in the atmosphere or liquids entering in contact with it. This forms an insoluble layer of silver sulphide, preventing the metal to corrode in depth. Silver can be dissolved in nitric acid, forming silver nitrate. This silver salt used to be the key raw material in the manufacture of photographic materials.
Palladium normally is not lightly oxidized.  However some industrial processes require extreme circumstances of temperature and oxygen pressure, which may cause thin palladium electrodes to dysfunction. When applied in catalytic converters (for automotive exhaust filters), the palladium quantity needed exceeds that of platinum, compensating some of the relative price advantage. Palladium is most often used for exhaust filters in normal gasoline engines. Diesel engines require catalytic exhaust filters with platinum. 'Three way' catalytic converters also include the use of some Rhodium, contributing to a significant reduction in the emission of nitrogen oxides.

Further information: Interviews and presentations (on Youtube)

3 comments:

  1. Scarcity is the most common problem of the society now a days due to poor government, graft and corruption. In able to supress this kind of problem we should do a move and help hand in hand .Also, we should always be open-minded in any situations.

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