Precious Metals

Platinum Investing

The new platinum-free catalyst was developed by Nisshinbo Holdings and is not the only platinum substitute catalyst being considered for fuel cells.

A Japanese company has developed a catalyst for fuel cells that replaces platinum with a carbon alloy. The technology involves a heated carbon alloy, which mimics the role of platinum in starting the chemical reaction between hydrogen and oxygen.
The platinum-free catalyst was created by Nisshinbo Holdings (TSE:3105), and will be supplied to Canada’s Ballard Power (TSX:BLDP,NASDAQ:BLDP) for use in fuel cells that will power portable electronics. The new fuel cells will have an output capacity of 30 watts; they will be able to charge up to six smartphones and will be released in December.
The company will also aim to adapt the technology for use in automotive fuel cells. The US Department of Energy notes that catalyst materials account for between 40 and 45 percent of a single fuel cell-powered vehicle’s total cost, and carbon is substantially cheaper than platinum.

Nisshinbo is not the only company interested in replacing platinum in fuel cells. Recently, researchers at the University of Delaware created new technology that replaces the platinum used in fuel cells with tungsten carbide. Like carbon, tungsten carbide is also much cheaper than platinum — a kilogram of platinum costs about $30,000, while tungsten carbide costs about $150 per kilogram.
If these advances become more mainstream, it’s possible that platinum demand could be impacted. That said, a more imminent threat to platinum demand is electric vehicles. While fuel cells currently account for relatively little platinum demand, platinum’s main use is in catalytic converters, which moderate the dangerous qualities of vehicle exhaust. Electric vehicles do not require catalytic converters, and as they grow more popular platinum may become less crucial to the auto industry.
A number of announcements this year have highlighted just how quickly electric vehicles may become the norm. Just this week, China said it is considering a ban on sale of gasoline- and diesel-powered cars. China is the world’s largest vehicle market, and the announcement triggered a 5.6-percent rise in an index that tracks new-energy vehicles, according to Reuters. The index launched near the start of 2016 and has gained over 20 percent in 2017.
Britain, France, Norway and India have made similar commitments, and are looking at banning the sale of petrol and diesel vehicles in 2040. China has not provided a timeline, but Xin Guobin, vice-minister of industry and information technology, told a forum in Tianjin that “relevant research” is underway, and that the government is working on a timetable for implementing the ban. In August, German Chancellor Angela Merkel hinted that it is only a matter of time before Germany enacts a similar ban.
Speaking in July about the potential impact of electric vehicle uptake on platinum, Bodo Albrecht, chair of the International Precious Metals Institute, said the uptake of electric vehicles could be “more devastating for platinum group metals than digital photography was for silver.” He also said he does not see platinum demand from fuel cells replacing lost catalytic converter demand.
“Rather than looking at the opportunity of hydrogen electric technology, what we should be concerned about is the replacement of platinum group metals by battery electric technologies. The impact on the precious metals industry will be massive,” he said.
The bright side for platinum is that the advance of electric vehicles will not be immediate. As Albrecht noted, the timeline is unclear — “[s]ome say as early as 2023, others say 2040. The truth will be somewhere in the middle.”
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.


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