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| A BALANCED
PLATINUM MARKET |
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Anglo Platinum expects a balanced platinum market in 2009. The platinum price, in the Company’s view, suffered a downside overcorrection in the second half of 2008 and the metal is likely to trade at above $1,000 per ounce in 2009. Platinum remains a strategic industrial and premier jewellery metal, and the long-term fundamentals remain sound.
In 2009, demand will be negatively impacted by the expected further reduction in vehicle production, auto manufacturers’ stocks, and by possible reduction in industrial demand. This is expected to be offset by increased demand resulting from the tightening of vehicleemission legislation, increased jewellery demand and lower volumes of recycling. |
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| Chris van Rensburg was the winner of the 10th PlatAfrica jewellery competition in the professional category for his innovative jewellery design in 2008. This was not the first time Chris has won the PlatAfrica award. |
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PLATINUM AND PALLADIUM |
At 6.5 million ounces, net demand for platinum was marginally down on 2007 as the strength in the
industrial and investment sectors was insufficient to make up for the weakness in the autocatalyst and
jewellery sectors. Gross autocatalyst demand fell owing to a steep decline in the output of vehicles in
North America, coupled with a shift in consumer demand for smaller, more fuel-efficient vehicles. High
prices in the first half of the year resulted in a decline in the fabrication of jewellery and a dramatic
increase in the recycling of scrap metals. However, there was a significant uptake in jewellery during the
second half of the year, resulting in a higher demand than anticipated. Supplies of platinum fell by 7%,
the net effect of which was a deficit of about 400,000 ounces.
Palladium demand remained virtually unchanged in 2008, with the decline in autocatalyst demand
offset by strength in other applications. Palladium continued to increase its share of the gasoline and
light-duty diesel markets, but the growth in these areas could not counteract the steep decline in
demand from the North American autocatalyst market. Supplies of palladium declined sharply
owing partly to a reduction in South African production, but more importantly to a decline in
shipments from Russia. The decline from Russia is due to less production from Norilsk as a result of
lower grades and the fact that there were reduced shipments from state-held inventories in 2008.
With the reduction in supplies, the market surplus decreased sharply to just short of 200,000 ounces.
Demand for rhodium declined by 12% in 2008 as automotive manufacturers’ efforts to reduce their
loadings of rhodium resulted in a decline in purchases of the metal. Supplies also fell by 16%, resulting
in a deficit of 40,000 ounces. |
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AUTOCATALYST |
| Despite poor automobile sales in major markets in the second part of the year, gross demand for
platinum declined only marginally in 2008, falling by 8% to 3.8 million ounces. The large decline in
platinum demand from North America was balanced out by increased demand from other regions.
Growth in demand from Europe came on the back of an increase in the production of light-duty
diesel vehicles and of the fitment of diesel particulate filters to these vehicles ahead of legislative
requirements. Growth in vehicle production in emerging markets, together with the adoption of
increasingly severe emissions legislation in some of them, also boosted demand for platinum. The demand for palladium decreased by 2% to 4.5 million ounces, while demand for rhodium fell by 11%
to 790,000 ounces. |
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| THE CHALLENGES FACING THE AUTOMOBILE INDUSTRY |
The global automobile industry has been
beset by problems arising out of the
economic crisis in 2008. The collapse of
banks and the resultant reduced credit
availability has had a severe impact on
demand for new vehicles, and sales have
fallen in North America, Europe and Japan.
The outlook for 2009 is worse, with sales
expected to decline even further in every
region except China. Overall, sales of lightduty
vehicles are forecast to fall by 4.8%.
The effect of the decline in vehicle numbers
on platinum group metal (PGM) demand
in 2009 will be in line with the decline in
vehicle sales. However, shifts in market
share between different vehicle types, the
thrifting of PGMs and metal substitution are
affecting the individual PGMs differently.
While North America has borne the brunt of
the reduction in vehicle numbers, demand
for platinum and rhodium has decreased
disproportionately. Original equipment
manufacturers (OEMs) have aggressively pursued thrifting strategies, achieving
significant reductions in platinum and
rhodium loading. The reduction in demand
developing countries for PGMs has been
compounded by a switch in favour of
smaller vehicles, and from trucks to cars.
The move by consumers towards smaller,
more fuel-efficient vehicles, has benefited
Asian transplants at the expense of the
Detroit Big Three. This move will benefit
platinum as the Japanese, having increased
their palladium usage in emission-control
systems, have not entirely eradicated
platinum’s use in gasoline engines.
In Europe, demand for platinum is forecast
to decline further in 2009. Most of the
decline can be attributed to the production
cutbacks and the switching to palladium
catalyst formulations on both gasoline and
diesel vehicles. Production of vehicles in
Europe in 2009 is predicted to fall to just
over 18 million units. Demand for platinum
is expected to rise in 2010, with the
increased fitment of diesel particulate filters in addition to diesel oxidation
catalysts on diesel vehicles.
Unlike in North America and Europe,
vehicle production increased in Japan in
2008. Despite weakening demand in its
domestic market, Japan increased its
production of light vehicles for export. The
increase in demand for passenger vehicles
in both Europe and North America
necessitated an increase in the capacity
utilisation of Japanese plants to meet
supply shortfalls in the export markets.
Demand for PGMs in the rest of world is
expected to increase in 2009, owing to
continued increases in car ownership in
Russia and China, and to strong demand
for platinum in the light-duty diesel sector,
particularly in South Korea and India.
Overall, the market is likely to balance in
2009 and is expected to recover in 2010,
when demand for platinum in this sector is
expected to exceed 2007 levels. |
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Europe |
Demand for platinum in the European autocatalyst sector rose to over 2 million ounces in 2008 while
demand for palladium rose to 1.1 million ounces.
Despite a decline of 3% in the production of new vehicles in 2008, the demand for platinum
increased. This increase resulted from the increasing market share for diesel vehicles fitted with
platinum-dominated oxidation catalysts. Light-duty diesel vehicles accounted for 52% of total light-duty
vehicle production in 2008. Although sales of diesel cars slipped in the third quarter of the year,
this was in reaction to steep fuel prices rather than a change in trend. Prices for diesel fuel rose
disproportionally, eroding some of diesel’s advantage over petrol. Platinum demand in this sector was further enhanced by the fitment of diesel particulate filters, ahead of legislation that will be
phased in from next year.
Demand for palladium rose by 16% to 1.1 million ounces. Most of this increase can be attributed to
the increasing use of palladium in the light-duty diesel sector. Substitution of palladium for platinum
in the light-duty diesel sector increased as the platinum price rose during the first half of the year. The
high price differential between platinum and palladium accelerated advances in technology that
have enabled the use of greater amounts of palladium in diesel oxidation catalysis. With the
implementation of this technology now available, palladium usage in diesel vehicles rose to over
200,000 ounces in 2008.
Most of the transition to palladium in gasoline systems in Europe has already occurred, with only a
minor amount of platinum remaining in the light-duty gasoline sector. Effective thrifting strategies
embarked upon by original equipment manufacturers (OEMs) in Europe have enabled the
achievement of more exacting emission legislation without the need for additional palladium.
Therefore, demand for palladium in the gasoline sector remained static. |
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| SELECTIVE CATALYTIC REDUCTION
(SCR)/NOx TRAP |
In Europe, over half of new vehicles sold annually are now powered by diesel engines. Euro
6 emissions legislation coming into force for cars and light commercial vehicles in Europe
from 2014 will tighten allowable nitrogen oxides (NOx) emissions from diesel vehicles by
around 70% compared with today’s Euro 4 standards. It is likely that these tighter Euro 6
limits will require the majority of diesel vehicles to be fitted with additional catalytic aftertreatment
to control NOx emissions.
In the US, although the number of diesel passenger cars sold each year is relatively low,
Tier II Bin 5 legislation already requires new diesel vehicles to be fitted with NOx aftertreatment.
Besides engine management, there are two main ways in which car manufacturers can
choose to reduce vehicle NOx emissions: selective catalytic reduction (SCR) or the use of
lean NOx traps (LNTs), also called NOx adsorber catalysts or NACs. The two technologies
can also be used in combination. |
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Selective catalytic reduction
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| SCR is already widely used to control NOx emissions from industrial sources, and on heavy-duty
vehicles in Europe and the US. SCR is also being used on some of the Tier II Bin 5 diesel
passenger cars in the US, such as the well-publicised Mercedes-Benz ‘BlueTec’ vehicle. |
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Cross section of an SCR catalyst used to control NOx emissions
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SCR systems work by chemically reducing nitrogen oxides to nitrogen. In a lean gas
stream, such as in a diesel vehicle, it is necessary to add a reductant to the system
to enable this reaction. The most common reductant applied on vehicles
today is ammonia. Any source of ammonia can be used, but most
commonly the source is AdblueTM, a water/urea solution, which
is supplied to the exhaust system via an additional tank. This
solution decomposes in the exhaust stream to form the
ammonia.
Mercedes-Benz has also developed a BlueTec vehicle in
which the ammonia required for the SCR reaction is
generated onboard by the use of an additional
NOx storage catalyst, thus removing the need
for a separate AdBlueTM tank.
SCR technology uses a non-precious metal catalyst (such as vanadium, iron or copper), but
requires the use of an additional oxidation catalyst to reduce emissions of carbon
monoxide and unburned hydrocarbons, and a particulate filter to reduce soot emissions.
Both of these additional catalysts contain platinum group metals. |
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Lean NOx traps (LNTs) |
| Alternatively, NOx can be removed from a lean gas stream by chemical adsorption onto a
catalyst, hence the term NOx adsorber catalyst (NAC) or lean NOx trap (LNT). The LNT has
a finite capacity for NOx but it can be regenerated by changing to a rich gas stream. Under
these conditions the catalyst releases the NOx and is thereby regenerated, and the NOx is
reduced to nitrogen. |
How a lean NOx trap functions |
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| Lean conditions: Engine-out nitrogen oxides (NOx) are adsorbed onto the catalyst
surface. The process of adsorption releases carbon dioxide (CO2). |
Rich conditions: The catalyst is regenerated by changing to a rich gas stream:
First, the catalyst releases the NOx and is thereby regenerated.
The NOx is then reduced to nitrogen (N2). LNTs use relatively high amounts of platinum
group metals (platinum-rhodium or platinum-palladium-rhodium) as their catalytic
component. In addition to trapping nitrogen oxides, LNTs also reduce carbon monoxide
and hydrocarbon emissions. It is expected, therefore, that an NOx trap will be used in place
of an oxidation catalyst on many Euro 6 vehicles, to reduce the costs of catalytic aftertreatment.
However, a particulate filter will still be required to control soot emissions.
An example of a vehicle with a lean NOx trap in use today is the VW Jetta TDI which won
the ‘Green Car of the Year’ award in the United States in 2008.
Most carmakers have yet to decide on their chosen NOx reduction strategies to meet Euro
6 legislation when it is enforced in 2014. The current development work suggests that the
smallest diesel engines may rely on advanced engine technology to control NOx exhaust
emissions, without the need for additional NOx after-treatment. In contrast, the largest
vehicles are more suited to SCR technology, with sufficient space to accommodate the
extra AdBlueTM tank. Medium-sized vehicles, representing perhaps up to a third of the
European light-duty diesel fleet, are expected to use some form of PGM-containing LNT. |
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| Further erosion of platinum demand by palladium in the light-duty diesel sector is expected in the
short term. There are however, constraints on the greater usage of palladium in the diesel sector, such
as the higher light-off temperature of the bi-metal catalyst. Furthermore, the choice of nitrous oxides
(NOx) treatment adopted for Euro 6 legislation will influence the metal ratios in diesel oxidation
catalysts (DOCs). For example, as platinum possesses a higher nitrous oxide (NO) oxidation activity, a
dual metal oxidation catalyst with a high platinum to palladium is expected to be preferred for use in
conjunction with selective catalytic reduction (SCR). |
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