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http://www.kitco.com/news/2017-10-12/Q-amp-A-Platinum-apos-s-discount-to-palladium-sparking-thoughts-of-substitution-JM.html

By Jan Harvey

LONDON, Oct 12 (Reuters) - Platinum's drop below palladium prices for the first time in 16 years is leading some automakers to consider reintroducing platinum to the mix of metals used in gasoline autocatalysts, Johnson Matthey's general manager for market research Peter Duncan told the Reuters Global Gold Forum on Thursday.

Following are edited excerpts from the conversation:

Q: To what extent are automakers and autocatalyst manufacturers in the position to switch between catalyst loading composition based on palladium-platinum price parity?

A: I would say that it is very early days for platinum substitution back into gasoline catalysts. The problem is that it is very expensive and time-consuming to change catalyst designs, so original equipment manufacturers (OEMs) need to be very sure that by the time they have done it was still worth doing. So, they will want to see the price of palladium above that of platinum for some time.

However, some OEMs are now looking at dual "homologation" i.e. testing two catalyst systems, one with platinum, one without. I see this happening more over time if the palladium price remains above the platinum price.

Q: How far do you see the move away from diesel cars in Europe cutting diesel autocatalyst demand?

A: According to (industry research group) LMC, sales of diesel cars in Western Europe fell from 45.1 percent of the market in July to 42.7 percent in August. We base our platinum group metals demand forecast on LMC's outlook, and their last report showed diesel share (including diesel hybrids) falling to about 39 percent of European production in 2022 from around 47 percent this year.

Q: How far could the impact on platinum group metals demand be softened by the impact of tightening emissions standards on loadings?

A: We expect average PGM loadings of diesel car catalysts in Europe to decline by around 10-12 percent over the next 5 years, and those of gasoline cars to increase by around 15 percent. Legislation is getter tougher, but catalyst technologies are evolving, leading to a reduction in average PGM loadings in diesel systems.

Q: What does that mean for platinum and palladium demand from the European auto market?

A: The period when we could always expect platinum demand in European vehicle catalysts to rise is over - now we need to look to markets like India and China to replace that growth. Demand for platinum in European car catalysts will show a decline over the next 5 years, whilst that of palladium will rise.

Q: How will tightening emissions standards in China affect loadings of both platinum and palladium there?

A: Chinese emissions legislation is aggressive and it's real. China is set to introduce China 6a from 2020. We anticipate that many OEMs will skip 6a and adopt an early-stage approach to China 6b, which is amongst the toughest emissions legislation anywhere in the world. This will drive loadings significantly higher.

Q: What's your view of platinum and palladium demand growth from the automotive sector over the next year? And the next five?

A: Between now and 2022, platinum demand will grow less than palladium demand, but we see the global automotive demand figure for both metals higher in 2022 than in this year.

Now for an opposing look at these two precious metals:

http://www.kitco.com/commentaries/2017-08-18/Will-the-Electric-Car-Revolution-Sink-Platinum-and-Palladium.html

But take note that in our case we do have other metals to fall back on once platinum and palladium lose their luster, which will become precious in their own a right in the not so distant future.

Quote from the article:

While the platinum-group metals (we mean here platinum, palladium, but also rhodium) are likely to be the biggest losers (according to the UBS, the demand for them would decline by 53 percent in the world with only electric cars), other metals will benefit from the revolution. Clearly, lithium demand will soar, as most electric vehicles use lithium ion batteries (however, investors should remember that lithium is relatively abundant, while scientists are already working on solid-state batteries which do not have to rely on lithium). The same applies to cobalt and manganese. The production of each of these metals is expected to rise more than 100-fold from 2015 to 2023, while the demand for graphite, nickel and aluminum are forecasted to soar about 65 times in that period. The market in rare earth elements, neodymium in particular, could also rise.

Comment: If there is an anticipated demand for both platinum and palladium by 2022 then this may well coincide nicely with the opening of the Eagles Nest mine.  In my opinion this demand should maintain itself for several years to follow after the mine finally goes into production.  By the time these two metals fall out of favour Noront will have made significant profits from their extraction at Eagles Nest.  So much so that it will have paid for not only the mine itself, but also our continued exploration and efforts to tunnel to the Blackbird deposit and beyond.

Once the world moves toward  battery powered technology our continued sulphide nickel discoveries , along with our expansive chromite claims will allow us to capitalize on the upcoming advances in battery technology, as well as the concurrent expectation of lighter, stronger, and more corrosive resistant steels, and stainless steels whose selective raw materials will be sourced in abundance from us.  For now, and for the next at least next 20 years or longer (IMHO), both the developing and third world countries will still be reliant on these two precious metals, simply because the third world will not be ready for the battery age, and the developing world still slowly be weening itself off diesel (trucks, trains, and cars).  But even when these two precious metals fall out of favour, both our nickel and chromite will keep us going forever. 

In short, we have both sides of the coin covered people.  No matter when it is flipped, Noront will always win the toss.