Demand for PGMs hinges on energy transition
There is a clear case for the role in the energy transition of platinum group metals (PGMs), the largest contributor to total mining sales in SA.
But the focus in the energy transition has so far been skewed towards batteries and electrification, especially in the automotive sector, and the demand this will place on critical metals such as cobalt, lithium, nickel and copper.
This focus on electrification, said Margery Ryan, PGM advocacy manager at Johnson Matthey, would bring the world by 2050 only part of the way towards achieving net zero emissions in line with the goal to limit global warming to 1.5 C.
To close the gap, the world would have to look at complementary technologies and it was here where PGMs could play an important role, she said.
PGM mining employs about 180,000 people in SA and accounted for about 25% (about R200bn) of SA s total mining sector sales in 2023, according to the Minerals Council of SA.
Weak demand caused a sharp drop in PGM basket prices, which fell 33%-40% (depending on the basket composition). This has already resulted in SA platinum miners delaying projects, shutting mine shafts, cutting capital expenditure and reducing employee numbers.
While the industry expects demand and prices to show some recovery by 2025, the long-term demand for PGMs will depend on the pace at which vehicle manufacturing moves from internal combustion engine (ICE) vehicles to fully battery electric vehicles (BEVs).
Ryan, who was a speaker at the recent PGM and hydrogen discussion days hosted by Resources 4 Africa in Johannesburg, said the PGMs outlook up to 2030, based on known applications for these metals, suggested that there would be winners and losers.
Ruthenium and iridium are likely to show sustained growth in demand, even though there are some questions about whether the increase in demand could actually be met this is being driven by the use of these two metals in technologies for the energy transition, she said.
However, some scenarios suggested a decrease in demand for palladium and rhodium which together accounted for 60% of the PGM basket income split for SA in 2023.
Platinum, which experienced demand growth at the start of this decade, was likely to see demand plateauing from 2025 onwards. This assumed, said Ryan, the expected decline in the conventional automotive demand for platinum to manufacture catalytic converters for ICE vehicles was countered by growth in the new replacement automotive demand for platinum for fuel cell electric vehicles.
Platinum is used as a catalyst in fuel cell electric vehicles which use roughly double the amount of platinum than ICE vehicles.
At the time when we produced this forecast, we saw that handover in demand happening relatively smoothly, but there are some uncertainties about how this will play out.
Some automotive producers are still very bullish about BEVs, but others are becoming more cautious in their outlook and see the potential for more ICE production, particularly in the form of hybrids. That is also critically important for palladium and rhodium as they are highly exposed to the ICE market, she said.
She said, however, that in the alternative BEV dominant view demand for these metals was likely to continue declining up to 2030.
At present, the largest single market for PGMs was in the manufacture of catalytic converters that are used in ICE vehicles this accounted for about 60% of total PGM demand.
We know production of [ICE vehicles] will have to decline, but the pace of that decline and whether it will actually go to zero or close to zero are still open questions, she said.
This created the space for market development and for new applications (such as fuelcell electric vehicles) to emerge.
The focus in the energy transition, said Ryan, had been heavily skewed towards batteries and electrification, which ignored possible supply gaps for critical so-called energy minerals and the transition needs in hard-to-abate sectors such as aviation, shipping and steel making.
Electrification with support from batteries comes with an intense requirement for critical metals such as cobalt, lithium, nickel and copper.
Data from the International Energy Agency project a 70% increase in demand for these metals combined with cobalt and nickel demand more than doubling, lithium increasing tenfold and copper by 60% over the next 20 years.
This, said Ryan, was not being primarily driven by demand from the renewable energy sector, but was overwhelmingly driven by the electrification of energy consumption including the expansion in electricity infrastructure and for the manufacture of batteries that are used in BEVs.
The replacement for oil and coal is not wind or sun, but metals. This raises serious questions about whether the supply of energy metals will ramp up fast enough and sustainability enough, she said. There is clearly a supply gap, but we have to ask, in our efforts to close the supply gap, what harm is going to be done to the environment and biodiversity.
But, she said, even solving this problem did not result in a complete and successful energy transition.
If the focus remained predominantly on electrification and batteries, there would still be many unaddressed challenges in the energy transition, but these could be addressed by investing in complementary technologies that use PGM.
For example, Ryan said, passenger cars accounted for about 10% of the world s total energy use, yet addressing this would consume most of the additional forecast energy metal supply.
However, deploying a mix of BEVs and fuel-cell EVs could shrink down the metal intensity of transitioning the automotive sector and increase the efficiency of metal use.
SOME AUTOMOTIVE PRODUCERS ARE STILL VERY BULLISH ABOUT BEVS, BUT OTHERS ARE BECOMING MORE CAUTIOUS
Margery Ryan PGM advocacy manager at Johnson Matthey