Use of Palladium in Catalytic Converters Driving Demand for the Precious Metal

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Oct 14, 2019, 09:00 ET

LOS ANGELES, Oct. 14, 2019 /PRNewswire/ -- Palladium is increasingly being used in vehicle catalytic converters designed to reduce harmful emissions for engines still using petroleum. Its continued demand in the automobile industry, despite efforts to switch to EVs, has been a major factor in the steady increase in its value.

Palladium remains a vital product in the automobile industry, along with cobalt and lithium that are used to make EV batteries. Palladium, in particular, is highly demanded in this industry because it is used to neutralize toxic pollutants by turning them into water vapor and carbon dioxide. Its growing value makes it an attractive pursuit for mining companies including North American Palladium Ltd. (TSX: PDL) (OTCPK: PALDF), Vale S.A. (NYSE: VALE) and Anglo American Platinum (OTCPK: ANGPY)

21C Metals, Inc. (CSE: BULL) (OTCQB: DCNNF) is one of the newer junior miners with keen interest in precious metals such as palladium used in the automotive industry. 21C Metals' assets include the Tisova cobalt and copper project near the border of Germany and the Czech Republic, and its recently acquired palladium projects in Ontario, Canada. This base gives 21C Metals operations in prolific mining regions of both Europe and North America.

Mechanism of working of Catalytic converters

A large portion of the palladium supplied to the market is used by the automotive industry. Regulatory authorities in different regions across the world have tightened their emissions standards on combustion engine vehicles. Palladium is used in catalytic converters to remove hydrocarbons, carbon monoxide, and other harmful gases from exhaust emission.

A catalytic converter is one of the most expensive parts of a car, costing up to $1,000. The reason they are so costly is that they use expensive metals to promote chemical reactions that remove harmful components from exhaust gases. With time, the catalyst in the converter gets degraded and need to be replaced.

Manufacturers normally spread palladium over a large surface area of the converter for them to be effective. With time the surface area can lessen because metal atoms move and form large particles that reduce surface area. In order to counter sintering, manufacturers will use huge amount of metals so they can convert emissions to standards for the lifespan of the car of up to 15 years. Since the converters can decline in their effectiveness and require replacing, its expected that the demand for palladium will continue to be high.

Growing value of palladium

Platinum has, for a long time, been the most valuable metal that is used in catalytic converters. However, palladium has taken over as the most valuable metal this year with its value going well past platinum. The value of the rare metal was $1,429.05 per ounce at the time of this news. Palladium has performed exceptionally well in the market over the past few years with its current value doubling in price from 2017 to the present.

The growing value of palladium is attributed to an increase in demand as a result of most car manufacturers shunning the use of platinum and preferring to use palladium. Regulations on emissions are helping to drive demand. Vehicles using fossil fuels still dominate the market by a huge margin compared to electric vehicles, and it is not yet clear how the EV will affect demand for gasoline vehicles. For now, the demand is high, and so palladium rules the day.

21C Metals enhancing palladium exploration

21C Metals revealed in mid-July that it launched exploration efforts at the Tisova cobalt and copper project near the German- Czech border. The exploration activities aim to determine the potential of the project to produce an adequate and economic amount of the metals. The company delegated the job of compiling comprehensive geological data to the German firm Beak Consultants.

Prior to launching exploration, 21C Metals announced that it acquired the Agnew Lake Property after talks with its advisors and also after reviewing the geological database of the Ontario government. 21C Metals is continuing its exploration on the property and remains optimistic about its prospects for the palladium project. The company has so far completed about 20km of line cutting in its East Bull project in Canada. Its researchers collected 70 samples to determine palladium mineralization, and the results are anticipated shortly. 21C Metals also plans to carry out prospecting and sampling at East Bull project this month.

Leveraging the market

It is worth noting that despite the automotive industry's continued adoption of materials such as palladium for use in environmental efforts, the industry desperately is working to shift towards electric vehicles. But with EVs accounting for only about 4% of the entire automotive market worldwide, the demand for petroleum cars will remain a key driver for palladium.

Mining companies and the corresponding supply chains should expect to benefit from increased interest for palladium, as well as cobalt and lithium that are important in the manufacture of EV batteries. Companies at the forefront of supplying both of these industries include;

North American Palladium Ltd. (OTC: PALDF), carries out activities in Thunder Bay Ontario where they are exploring minerals in their Sunday Lake property. Recently the company said that it was expanding its PGM zone at Sunday lake.

Vale S.A. (NYSE: VALE) has a base metal segment that explores and mines non-ferrous metals and its by-products such as silver, gold, cobalt, and palladium among others. The company is actively involved in mining activities in the Sudbury basin in Ontario as well as in Manitoba, where its Thompson produces nickel.

Anglo American Platinum (OTCMKTS: ANGPY) is a South Africa based company, and a world leader in the mining of palladium. It is also the largest producer of platinum, accounting for over 38% of the world's platinum supply. Anglo American recently announced that it is considering the manufacture of electric car batteries using the platinum group of metals.

For a more on palladium, platinum, cobalt, and the upside for markets supplying these metals, view the report at USA News Group: https://usanewsgroup.com/2019/06/17/this-car-metal-keeps-hitting-new-records/

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