Fuel cells promise bright future for platinum
Date: 13-Feb-03
Country: UK
Author: Clare Black
Fuel cells promise to be one of the most important power sources of the 21st century and could power anything from mobile phones to cars.
They create electricity without pollution by combining hydrogen and oxygen into water. In their current form, they rely heavily on platinum as a catalyst.
Expectations of high future demand from the automobile industry for the metal, which is also used in jewellery, recently propelled prices to 23-year highs.
Almost every car manufacturer has a fuel cell programme and most have built and exhibited prototypes.
"Although this is very much a long-term issue, it has impacted on (platinum) sentiment now, just showing that in the longer term the demand picture remains really robust," Ingrid Sternby, metals analyst with Barclays Capital, said this week.
Michael Steel, market research director with UK-based metals refiner Johnson Matthey (JMAT.L), said fuel cell vehicles would not have make any significant impact on platinum demand for at least another 10 years.
In the next five years, buoyant demand from the Chinese jewellery sector would affect prices more than fuel cells would, although he was upbeat about the technology.
"To me, one of the most interesting things which mean that this (fuel cells) has long term potential...is the statement from (President) Bush," he said.
U.S. President George W. Bush unveiled his hydrogen fuel initiative last month in his State of the Union address, proposing $1.2 billion overall and new spending of $720 million over five years to develop technology and infrastucture to produce, store and distribute hydrogen for use in fuel cells.
"It is not so much about the money, but the fact that fuel cells were identified as the only viable alternative to the internal combustion engine. That is very significant in itself," Steel added.
HIGH COST OF PRODUCTION
Fuel cells developed for use in vehicles, known as proton exchange membrane (PEM) fuel cells, are currently very expensive to produce.
"The way a fuel cell is made at the moment is an incredibly bespoke process. You are not going to get any economies of scale," said Mark Cropper, editor of Fuel Cell Today (www.fuelcelltoday.com).
Steel said the amount of platinum used per fuel cell was much higher (three to five times) than it would be during large-scale production.
He said manufacturers ultimately expected to use around 10 grams of platinum per vehicle, approximately just over twice the amount that goes into a standard catalytic converter.
DEMAND OUTSTRIPS SUPPLY
The fuel cell industry is likely to become a significant consumer of platinum, with conservative estimates for annual demand for automotive and residential applications in 2010 of 500,000 ounces, according to a report on fuelcelltoday.com.
"With the platinum market already in deficit, this inevitably raises the question: will there be enough platinum?" the report said.
Demand for platinum has grown much faster than supply over the past five years, due mainly to a boom in the Chinese jewellery market and its use in autocatalysts as sister metal palladium became prohibitively expensive.
Global demand for platinum was forecast to climb 2.0 percent to a record of 6.37 million ounces in 2002, while supply increased only marginally to 5.88 million, creating a deficit of 490,000 ounces, according to Johnson Matthey.
South Africa, which dominates world platinum supplies and accounts for some 70 percent of output, is set to increase production significantly.
"If all currently planned projects are brought successfully into production, annual platinum supplies from South Africa will expand by at least 2.0 million ounces by 2010," fuelcelltoday.com said.