March 10, 2020 / 12:07 PM / 19 days ago

UPDATE 2-Sibanye, Implats and BASF develop new tri-metal catalyst, boosting platinum prices

* Sibanye, Implats and BASF develop new tri-metal auto catalyst

* Catalyst allows partial palladium substitution

* Spot platinum prices rise, palladium down

* GRAPHIC-Platinum and palladium prices: tmsnrt.rs/38Fqy0X (Adds platinum price, analyst quote)

By Tanisha Heiberg

JOHANNESBURG, March 10 (Reuters) - Sibanye-Stillwater said on Tuesday it along with Impala Platinum (Implats) and chemical company BASF had successfully developed a new tri-metal auto catalyst allowing the partial substitution of palladium with platinum.

The news sent spot platinum 2.5% higher at $883 per ounce while palladium eased 0.8% to $2,469 by 1300 GMT. Earlier, palladium fell as low as $2,399.

The research by BASF, which was funded by Sibanye and Implats, had successfully developed and tested the catalyst that would enable higher-priced palladium to be partially replaced with lower-priced platinum in light-duty gasoline vehicles.

“We are proud to have contributed to a solution which will normalize longer-term demand with supply and benefit all members of the value chain – from miners, to refiners, fabricators and OEMs,” said Implats CEO Nico Muller.

Prices of palladium and rhodium, widely used in vehicle exhausts to reduce harmful emissions, have climbed as tighter environmental regulations force carmakers to buy more of the precious metals for catalytic converters.

This could be the reprieve platinum miners have been waiting for as their main metal remains in a surplus partly due to shrinking demand, particularly since Volkswagen’s “dieselgate” scandal in 2015 which saw prices plunge.

Demand for platinum, used in the catalytic converters on vehicles with diesel engines, has been depressed since the scandal, down nearly 60% since a 2008 peak of $2,290 per ounce.

This has hurt platinum miners in South Africa which is the world’s top platinum-producing country, as the three metals are mined together, leaving the firms little room to meet rising palladium demands without increasing the platinum surplus.

“There are still 3.6 million ounces of above ground stocks of platinum so it will take a bit of time before that is worked through but it will still benefit the platinum price with extra demand for platinum,” said NOAH Capital Markets analyst Rene Hochreiter.

In a bid to stoke platinum demand Prestige Bullion, a joint venture between the South African Mint and Rand Refinery and backed by mining firms, on Monday launched a “big five” themed platinum coin long awaited by the mining industry.

The World Platinum Investment Council (WPIC) said in its latest quarterly report last week the platinum surplus would rise to 119,000 ounces in 2020 from 65,000 ounces last year.

Testing of the new catalytic converter has shown it has met emission standards but it would still take some time before it would be widely adopted by the motor companies, Sibanye spokesman James Wellsted said.

“It will take a year or two before it is phased into the new range of cars that is produced but it is a very positive step in the right direction,” said Wellsted.

Reporting by Tanisha Heiberg; Graphic by Zandi Shabalala; editing by Jason Neely and David Evans

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