Talk of platinum-free converter sends metal’s price reeling

The spot price of platinum dropped about $100 recently following an announcement in the United States by the Ford Motor Co. that it is developing a catalytic converter which does not require the metal for its fabrication. Platinum had been riding in the $600(US)-per-oz range when the news from Ford hit the market. The dealer price fell almost instantly to about $495, recovering some of the lost ground by close that day.

On the floor of the New York Mercantile Exchange, where price movement (up or down) is limited to $25 per day, the price of the January contract for platinum fell by $25 both the day of the announcement and the following day, and by $29.20 by the close of the next day. (The limit is expanded after two trading days have passed, to half of the limit again, or to $37.50.)

The December cash price on the mercantile exchange dropped to about $532 the day of the announcement, fell another $7.10 the following day, and then gained $4.50 the next day.

About 35% of the platinum mined today goes into the manufacture of catalytic converters, or pollution control devices, for motor vehicles. Demand for the emission control equipment has been particularly heavy in western Europe and is expected to pick up considerably in North America. Three-way catalysts

According to Johnson-Matthey, an authority in the platinum business, current emission control systems in western Europe almost exclusively make use of platinum- rhodium (at a 5:1 ratio) 3-way catalysts. (Rhodium, which is mined as a byproduct with other platinum group metals, currently sells for more than $1,200 per oz.)

Ford has not said what metal it intends to use as a platinum substitute. Speculation is that palladium, another platinum group metal, is the automaker’s choice. Palladium, which has been selling at about one-quarter-to-one-fifth the price of platinum and has been used (in Japan, for example) in the manufacture of converters, is said to have lower catalytic properties than its higher-priced cousin.

Palladium was trading in the $125-$130 range; after the announcement, the metal’s price climbed, with the December cash price hitting $146.25 by close of the following day, before falling back slightly the next day.

Coincidently, while the price of platinum was anything but steady on the money markets, the price of gold, which had been undergoing a recovery of its own the past weeks, decided to take a tumble, to the $410-$415(US) per oz range. Lead-sensitive equipment

According to the publication Metals Week, quoting from patent office papers, Ford’s new device, developed in conjunction with Johnson Matthey, “allows for the use of platinum, palladium, rhodium, iridium and ruthenium separately or in combination after the metal has been treated with a special alumina-based stabilizer.” Also, the Ford converter reportedly is lead sensitive, which means its major market would be North America, the part of the globe where unleaded gasoline is said to be most widely in use.

Ford says it is testing the new converters on 40,000-50,000 new model cars in California.

New mine production of platinum is centred in South Africa, which is responsible for about 80% of world’s output of the precious metal. In North America, there is only one platinum-palladium producer, the Stillwater operation in Montana. Set to become a producer is Madeleine Mines (TSE) at its Lac des Isles project in northwestern Ontario.

Exploration for platinum group metals continues elsewhere in Canada. Active in northern Quebec are La Fosse Platinum (TSE) and a 3-partner venture (on the Delta property) involving Falconbridge Ltd. (TSE), Oasis Resources (ME) and Messeguay Mines (ME). Across Canada, International Platinum (TSE) has interests in more than 20 platinum plays, while American Platinum (VSE) has interests in platinum properties in northwestern Ontario and Saskatchewan.