Electricity From Fuel Cells Sparking Demand for Platinum By...

Electricity From Fuel Cells Sparking Demand for Platinum

By Andre Janse van Vuuren Nov 18, 2014 9:06 PM GMT+0800

With platinum prices at a five-year low, Anglo American Platinum Ltd. (AMS) is seeking to boost demand for the metal with systems that produce electricity in remote areas.
Platinum, now used mostly for jewelry and catalytic converters for vehicles, has a unique ability to react with hydrogen, making it an efficient catalyst for fuel cells. Anglo American and Canada’sBallard Power Systems Inc. (BLD) are now testing the process to see if it can be used to light up an isolated village.
The test in South Africa, the world’s biggest platinum producer, may lead to wider use of fuel cells as a source of power in developing regions. More than 1.3 billion people worldwide live without electricity, and almost half are in sub-Saharan Africa, according to the International Energy Agency.
“If you’re looking for reasons to be positive about platinum, then the uptake in demand for fuel cells is definitely something to be shouting about,” Michael Kavanagh, an analyst at Noah Capital Markets (Pty) Ltd. in Cape Town, said by phone.
Naledi Trust, about 200 kilometers (124 miles) south of Johannesburg, lacked electricity for at least five years, until Anglo American and Ballard completed the system in July.
Photographer: Tomohiro Ohsumi/Bloomberg News
Platinum has a unique ability to react with hydrogen, making it an efficient catalyst for fuel cells.
The fuel cells have about 15 kilowatts of capacity, said Kleantha Pillay, head of market development at Anglo American Platinum, the world’s biggest producer of the metal. The test will run for at least a year.
Fuel Cells

“We’ve never trialled a fuel-cell mini-grid,” Pillay said. “It should be as easy for them to switch on a light as for you and I.”
The Naledi Trust system runs on methanol. Hydrogen is extracted from the fuel and fed through a membrane. That produces electricity through a chemical reaction that uses platinum as a catalyst.
The fuel cells use about 2.5 grams to 3 grams of platinum for every kilowatt of generating capacity, so the system that powers lights and refrigerators in the village has about 45 grams (1.59 ounces) of the metal.
A fuel-cell microgrid costs about $200,000 to install. Taking operating and capital expenses into account over 20 years, the Naledi Trust system costs $1.05 a kilowatt-hour to supply 35 homes.
That’s comparable to the cost of extending the national power grid 8 kilometers, according to the Johannesburg-based mining company known as Amplats. Fuel cells may be an economical option for providing electricity to communities that are more than 8 kilometers from the national grid, with as many as 200 homes that each require less than 3 kilowatt-hours a day.
Photographer: Nadine Hutton/Bloomberg News
A mineworker works with a drill on the rock face at the Impala Platinum mine in... Read More
Boosting Demand

Platinum producers are eager to see wider use of fuel cells, which would boost demand for the metal that has slumped 13 percent this year. The systems are also being used to power mobile-phone towers in remote locations and warehouse forklifts. Amplats is developing fuel-cell systems to power equipment in rural schools and mining operations, including headlamps and locomotives.
The company is among six that today announced the start of the World Platinum Investment Council, which will work to “develop an active investment market” for the metal, they said in an e-mailed statement.
About 70 percent of the platinum that’s produced every year ends up either in jewelry or in catalytic converters that control emissions from cars. Europe accounts for 25 percent of all platinum use, with the continent’s automakers the biggest source of demand behind Chinese jewelers, according to Johnson Matthey Plc.
The weak economy in Europe drove sales of cars to a two-decade low last year, and demand has been slow this year.
Fuel-Cell Vehicles

Mining companies are also banking on the mainstream adoption of fuel-cell vehicles, electric cars powered by hydrogen fuel cells instead of batteries. Hyundai Motor Co. began deliveries of a consumer SUV using the technology in June and Toyota Motor Corp. detailed plans for its Mirai sedan yesterday.
Photographer: Tomohiro Ohsumi/Bloomberg
A Toyota Motor Corp. Mirai fuel-cell powered vehicle is displayed during the launch... Read More
IHS Automotive estimates that global sales of light vehicles may reach 100 million by 2020. If 1 percent of them are powered by fuel cells, demand for platinum may climb 8 percent by then, Pillay said.
One caveat may be supply; it’s not clear whether producers would be able to satisfy vehicle manufacturers’ needs, said Kavanagh.
New Industry

“There isn’t enough platinum for fuel cells to become a mainstream technology, that’s the reality,” he said. Fuel cells will “remain a niche technology until they can figure out how to use less platinum” in the cells powering cars, he said.
Demand for fuel cells may eventually lead to the creation of a new industry in South Africa, which has the world’s biggest known platinum reserves and whose cash-strapped, state-owned electricity utility is struggling to meet demand.
“The entire fuel-cell value chain could be located in South Africa once sufficient scale is created,” Deputy Mineral Resources Minister Godfrey Oliphant said when the Naledi Trust project started in August. The next step would be testing as many as 300 units in other villages from next year, he said.
While Amplats evaluates the fuel-cell system, the residents of Naledi Trust have already passed judgment.