The world's largest supplier of platinum and palladium has a solution to the EV boom: invent a new battery. The EV boom could pose a long-term threat to its largest market.
Anglo American Platinum Ltd. hopes to develop a lithium battery that uses platinum group metals instead of cobalt and nickel. The goal is to create a new multi-billion dollar source of metal demand as electric vehicles reduce demand for traditional fuel autocatalysts.
Platinum miners have every reason to be concerned. BloombergNEF predicts that by 2040, electric vehicle sales will reach 56 million, accounting for about 57% of the entire automotive market, compared with only 2% at present. This may curb demand for automotive catalysts. Automotive catalysts use platinum and palladium to clean toxic emissions. Platinum prices are already under pressure-as drivers no longer use diesel engines and supplies are still plentiful, platinum prices are nearing their 10-year lows.
Platinum Group metals Ltd. chief executive Mike Jones said platinum may play a significant role in the battery sector, but we need to save other metals to make it viable. The company is working with Amplats to develop new batteries.
Amplats and Platinum Group metals have agreed to invest up to $ 4 million in Lion Battery Technologies Inc. to find a way to keep platinum cool with platinum and develop a product that is lighter and has greater mileage. The joint venture is studying how much metal is needed and plans to produce commercial prototypes in three to five years.
The idea is not new. Academia has been researching this technology since the 1990s, but to date, it has not been feasible to develop it.
CRU Group's battery metal analyst George Heppel said that there is no evidence that this battery can be produced on a large scale and that there is no technology to compete with nickel-cobalt batteries in terms of price and performance.
Part of the challenge is that platinum is much more expensive than cobalt and nickel. Early research from Platinum Group Metals said earlier research also showed that 0.5 to 1 ounce of platinum or palladium could be used for this new technology, six times the amount of metal currently used for traditional autocatalysis.
Although sales of electric vehicles have been rising, due to stricter emissions regulations, platinum consumption in the automotive industry has been quite strong in recent years, and the industry has increased the use of palladium, driving prices to new highs. Data from Noah Capital Markets Ltd. show that by 2030, total demand for platinum and palladium may increase by about 18% and 12%, respectively.
If platinum demand really slows, this would be particularly bad news for South Africa, where 75% of platinum and 40% of palladium are mined there. This industry contributed 96 billion rand ($ 6.3 billion) to South Africa's exports, and South Africa is on the verge of a second recession for several years.
Chris Griffith, CEO of Amplats, said that miners' support for new battery technology may increase, but more industry cooperation is needed to boost the demand for metals. The company is also working with Toyota Motor Corp. and Mitsubishi Corp. to study how to use platinum metal in a more environmentally friendly way.
Noah Capital analyst Rene Hochreiter said the use of platinum to make a new battery "will have a huge positive impact on the entire industry." But "this is still in its early stages," he said.