Belgium’s Umicore has reportedly found a way to replace some platinum with palladium in diesel emission control systems, boosting the price of palladium and its own shares.
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According to a Reuters report, palladium, roughly three times cheaper than platinum, soared to $US315 an ounce to its highest levels since October 2002.
Umicore, a metals and specialty materials maker, reportedly said its new diesel oxidation catalyst technology could replace about a quarter of the platinum used in existing systems with palladium, which could reduce the cost of a new diesel car by as much as $20.
“Twenty dollars a vehicle in the automotive industry is a huge number,” Martin Hess, Umicore’s executive vice president for automotive catalysts, told Reuters, adding: “I would see a potential order of magnitude (in the) range of one to five tons (of annual substitution of platinum by palladium) is something that is realistic.”
The company reportedly said the technology is designed for passenger cars and would help make catalytically activated diesel particulate filters more popular, while Hess told Reuters the substitution rate would depend on the speed of the new system’s introduction in the car manufacturing sector and the extent of market penetration: “We could see a substantial effect in 2005 (the year the technology could theoretically go to market) and certainly quite substantial effects in 2006.”
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By GlobalDataReuters noted that Umicore has been moving away from its mining roots and traditional zinc and copper business to recycling precious materials and advanced materials, became the world leader in catalysts for diesel cars after it bought OM Group’s precious metals division last year, and has since introduced new catalyst technology for diesel particulate filters that further cut harmful emissions.
Car makers such as France’s PSA Peugeot Citroen, a leading European maker of diesel engines, welcomed the news, Reuters said.
“The fact that palladium could be used in oxidation catalysts, if proved true, must be seen as good news, because it would give us a degree of freedom in terms of which precious metal to use, depending on price swings,” a spokesman told the news agency.
He reportedly said Umicore and British peer Johnson Matthey were PSA’s suppliers for diesel emission control systems and that the company was currently testing the new technology.
But Reuters said analyst reaction was mixed.
“We believe this development will be welcomed by automobile manufacturers as it will increase their choice of catalyst materials for diesel emission control systems,” Bank Degroof analyst Bernard Hanssens told the news agency.
But one analyst reportedly played down the impact.
“Palladium and platinum are interchangeable, palladium is not inherently cheaper, they tend to flip flop. Even if there is a price gap now, the increased demand for palladium if automakers make the switch is likely to bid it up so it’s not going to save them a whole lot of money,” Stephen Cheetham, car industry analyst at Sanford C Bernstein told Reuters.
