On the supply side, many factors influence available stock for
Although recycled PGMs only account for roughly one-quarter of all available stocks on a yearly basis, demand is exceptionally strong because it is considerably less expensive to recover precious metals from spent
These shortages are particularly evident looking at platinum and palladium. According to the “2017 PGM Market Report” from Johnson Matthey, throughout the last six years, platinum has averaged a global shortage of 346,600 ounces, while the shortage of palladium was 806,300 ounces. These shortages highlight the need for
Recycled platinum contributes 20 percent on average to the total net stock, while recycled palladium contributes 30 percent on average. With demand growing at a rate of 2 percent annually moving toward 2021, there is no slowing down. Recycled PGMs will be a small part of the solution, but they will be very sought after.
It may come as a big surprise that it is more than 10 times less expensive to recover PGMs from spent catalysts than it is to mine them. For example, the average global cost to mine one ounce of platinum from the ground was $932 in 2015, according to Statista, www.statista.com/statistics/418242/average-costs-of- platinum-production-globally-by-region. This is huge considering the average spot price for platinum in 2015 was $1,053 and $988 in 2016, according to Kitco.
Remember, with more than 75 percent of mined PGMs stocks coming in at above spot price, mining companies do not have much profit margin. The average spot market price for platinum in 2017 (as of Nov. 27) has been $952, and production costs certainly have not decreased in the last three years. (No data were available to calculate the mining cost for 2017 when writing this article.)
This is in stark contrast with the cost to recover 1 ounce of platinum from recycled
When you think about the challenges facing mining operations, it only stands to reason that recycling precious
In North America, we can roughly estimate that for every new vehicle sold, 1.5 scrap converters theoretically become available. That is if you believe in the trickle-down effect. If a new car is sold, somewhere down the line, an end-of-life vehicle (ELV) is born. Presently, we are seeing cars ranging from 10 to 15 years old reaching scrap yards. These vehicles typically have more than one converter on them, giving us the 1.5 figure.
If we are looking at just the United States, more than 13.1 million new light vehicles were sold in 2016. Using the trickle-down model, roughly 19.7 million scrap converters would have been available for recycling, contributing 348,001 troy ounces of platinum, 986,000 troy ounces of palladium and 102,130 troy ounces of rhodium. The United States represents 30 percent of globally recovered platinum, 50 percent of palladium and 30 percent of rhodium from recycled
An interesting trend to note in
Catalyst loading in gasoline engine exhaust systems became palladium rich in the midpart of the last decade, especially among automobile producers based in North America.
Interestingly, platinum and palladium can be inversely loaded in
With demand growing at a rate of 2 percent annually moving toward 2021, there is no slowing down. Recycled PGMs will be a small part of the solution, but they will be very sought after.
Even with price volatility in the proceeding decade, palladium historically has been sold at a great discount to platinum. The proof is in the average yield of precious metals per metric ton of
The ferrous scrap connection
While future loadings of
From the perspective of converter value, however, we already are past the 2014 per-can averages. With palladium pricing overtaking that of platinum, the average per unit values for converters
The real takeaway from all of this is that the global need for PGMs is growing, and demand for the PGMs recovered from catalytic converter recycling is huge. The bulk of the value from converters is given directly to the seller, namely the scrap yard or core buyer. Catalytic converter buyers that have a good source of buying information can expect to make anywhere from 15 percent to 30 percent profit buying and reselling materials to a converter processor/refiner.
Traditionally, scrap yards have stayed away from purchasing catalytic converters because of the potential downside risk if they have little purchasing information or knowledge. While yards that decommission ELVs profit from the converters they dismantle, they still might shy away from purchasing converters because of gaps in their knowledge and individual state buying restrictions.
With palladium pricing overtaking that of platinum, the average per unit values for converters are now stronger than in 2014.
Fortunately, that is all changing. As with everything in our lives, technology is making advances in the converter recycling industry. Some converter companies are making it easy to purchase converters and send them off to be refined. If your company presently is selling catalytic converter material, you should ask your present buyer what tools are available for you to start purchasing. What
Demand for PGMs is stronger than it has ever been as emerging economy countries and First World nations improve their emissions standards. Shortfalls in PGMs stocks have been ongoing for a decade. Mining operations will not be able to meet the needs of the market, and it will be up to the recycling industry to try to make up the shortfall in supply.