An investigation into the impact of the substitution of platinum in auto catalysts on the South African economy

Ludik, Henk (2010-03)

Thesis (MBA (Business Management))--University of Stellenbosch, 2010.

Thesis

ENGLISH ABSTRACT: South Africa has historically benefited from its mineral wealth, building one of the leading mining industries in the world. South Africa holds the worlds largest known PGM (or precious group metals) resource base (in a geological formation known as the Bushveld Igneous Complex), with an estimated life of 230 years (at current mining rates). This precious commodity is a precious source of both the direct as well as indirect contributions into the South African economy, as well as a leading source of employment in the South African mining industry. PGMs are predominantly used in auto catalysts, with an estimated 60% of global demand emanating from this application, where the commodity is used in breaking down noxious compounds in exhaust emissions. Given the strong correlation between automotive production and platinum sales, it seems viable to assume that platinum sales will continue to grow as more stringent legislation is introduced globally to reduce automotive emissions. This can currently only be down by increasing the platinum loads in auto catalysts, as alternative technologies are not widely accepted or developed at present. Given the influence (and positive correlation between) demand and prices, it appears that PGM prices will be driven upwards as demand continues to grow. This effect may be exacerbated by the fact that the expansion in demand is likely to outgrow the expansion in supply, given that few significant platinum operations have been started in recent years. Following the strong rally of commodity prices, specifically PGM prices in mid-2008 that saw platinum at a record high of USD2276/oz, major automotive producers have indicated that they are investigating alternatives to the application of precious metals in catalytic converters, in an attempt to curtail production costs. Although no viable substitute could be developed as yet, various alternatives (such as silver alloys) have been mentioned throughout the media. The purpose of this paper is to investigate the impact of such a substitution event on South African PGM producers and its resultant effect on the South African economy. The study will attempt to determine, at a high level, the direct impact of the event, as well as the indirect consequences of the proposed substitution event.

AFRIKAANSE OPSOMMING: Die Suid-Afrikaanse ekonomie is histories op die mynbou- en landbousektore gebaseer, wat gelei het tot Suid-Afrika se wêreldklas mynbou industrie. Suid-Afrika beskik oor die wêreld se grootste PGM reserwes (in 'n geologiese formasie, ook bekend as die Bosveld Stollings Kompleks), met ‘n geskatte lewe van 230 jaar (teen huidige mynbou tempo's). Die komoditeite is verantwoordelik vir ‘n aansienlike hoeveelheid direkte en indirekte waardetoevoeging tot die Suid-Afrikaanse ekonomie. PGM’s word hoofsaaklik in katalisators in voertuie gebruik, met nagenoeg 60% van wêreldwye vraag wat uit die toepassing voortspring. PGMs word gebruik om uitlaatgasse op te breek en te verwerk in motorvoertuie. Gegewe die hoë mate van korrelasie tussen PGM en voertuigverkope, blyk dit voor die handliggend dat platinumverkope sal aanhou styg soos wat omgewingswetgeging in bepaling van toelaatbare uitlaatgasse in motorvoertuie strenger word. Die vermindering van uitlaatgasse is huidiglik slegs moontlik deur die verhoging van PGM ladings in katalisators, gegewe dat alternatiewe tegnologieë nog nie ver genoeg gevorder is om geimplementeer te word nie. Die hoë mate van korrelasie tussen PGM pryse en PGM vraag dui dat dit hoogs waarskynlik is dat die prys van edelmetaal sal aanhou styg soos wat vraag toeneem. Die verskynsel sal moontlik verder bou op die verwagting dat vraag vir die metaalaanbod oor die langtermyn sal oorskadu, siende dat geen wesenlike nuwe PGM myne onlangs oopgemaak is nie. Voertuigvervaardigers het aangedui dat hul alternatiewe tegnologieë opndersoek, nadat die platinumprys tot 'n rekord hoogtepunt van USD2276/ oz gestyg het in mid 2008. Die uitspraak is gelewer met die oog op koste kontrole in die vervaardiging van motorvoertuie. Alhoewel geen werkbare alternatief vir die edelmetale huidiglik bestaan nie, is verskeie moontlike materiale reeds in die media bespreek (byvoorbeeld verskeie silwer allooie). Die doel van die dokument is om die potensiële impak van so ‘n vervangings senario op die Suid-Afrikaanse ekonomie te ondersoek. Die studie sal poog om op ‘n hoë vlak die direkte en indirekte gevolge van die gebeurtenis te bepaal.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/989
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