British platinum group metal specialist Johnson Matthey will start operations at a new multi-million dollar automotive catalyst plant in Russia in September, the company's general manager in Russia said on Friday.

According to Reuters, Mikhail Piskulov said Johnson Matthey had already constructed the plant in the Siberian city of Krasnoyarsk and was now installing equipment to process palladium from Norilsk Nickel and other smaller Russian producers.

"The first phase will produce 500,000 to 1m units a year and demand several hundred kilograms of metal," Piskulov told Reuters on the sidelines of a metals conference organised by the Adam Smith Institute.

"In the first place, this will be palladium, but we will use other types of metal produced in Russia," he added later, according to the news agency.

Palladium, used in jewellery and dental instruments as well as vehicle exhaust systems, has risen 25% in value in the last 12 months on a wider investment boom in commodities and analysts forecast further rises this year, Reuters noted.

Norilsk, the world's largest palladium miner, accounts for more than half of global mined supply of the metal. Some of this is refined at Krastsvetmet, a plant adjacent to the new auto catalyst plant in Krasnoyarsk, the report added.

"We will sign metal supply contracts with producers in the Russian market. The biggest, of course, is Norilsk Nickel but there are other smaller producers," Piskulov told Reuters.

Production at the plant could rise as Russia gradually adopts new legislation to cut vehicle emissions, he told the news agency.

From 2008, Russia is due to introduce Euro III standards on all new sales of existing car models. This sets a maximum limit on vehicle emissions, including a cap on carbon monoxide emissions of 2.3 grams a kilometre.

Piskulov said demand from the catalyst plant could increase to as much as 10 tonnes per year of metals when Euro III standards are adopted fully, according to Reuters.