Platinum, Palladium, Rhodium
(22) The PGMs are classified as precious metals, due to their scarcity. Only one twentieth as much platinum is produced as gold, which is itself a rare metal. They are also classified as noble metals. Specifically, PGMs demonstrate great resistance to oxidation and corrosion, an ability to withstand severely high temperatures (with melting points above 1 500 øC), they do not dissolve in acid and are excellent conductors of electricity. Finally, they display excellent catalytic properties (a catalyst initiates or speeds up a chemical reaction, without undergoing any change itself). Because of these outstanding physical and chemical properties, they are found in a wide range of applications, including:
- jewellery;
- catalytic converters for cars, and other automotive applications, such as spark plugs and oxygen sensors,
- general industrial catalytic applications, industrial production processes such as petroleum refining, and the production of liquid crystal display (LCD) glass,
- electronic equipment such as the hard disks of personal computers,
- electronic components of the multilayer ceramic capacitors (MLCC) type which are widely used in computer and telecommunications equipment.
(23) Clearly, PGMs' properties render them important in the automotive, electronics and chemicals industries, and in the case of platinum, for jewellery products as well. It is considered, as explored below, that the affected markets in this operation are the markets for each individual refined PGM.
A.2. Platinum
(i) Main uses of platinum
(24) The main applications of platinum are in autocatalysts (32 %), industrial (20 %) and jewellery (38 %), while the residual (10 %) is basically sold for investment purposes (see Section VII.B.1). As discussed below, the substitution of platinum with other metals is limited for all these purposes.
Automotive applications
(25) Autocatalysts based on platinum, palladium and/or rhodium have been developed to eliminate the three most dangerous gases emitted by motor vehicle exhausts, namely, carbon monoxide (CO), nitrous oxides (NOx) and unburnt hydrocarbons (HC). The function of autocatalysts is to convert these noxious gases to less harmful components (carbon dioxide, nitrogen and water).
(26) Essentially two types of commercial autocatalysts are currently manufactured. The older system uses an oxidizing platinum/palladium catalyst that converts the CO and HC (thus named the 'two-way` system) to carbon dioxide and water. The newer system not only performs the task of the two-way system, but is also capable of dealing with the third pollutant, NOx. With the addition of rhodium to the platinum/palladium catalyst, the system then converts the CO, HC, and NOx to carbon dioxide, nitrogen and water. This catalyst is therefore called the 'three-way` system. The three-way catalysts currently use either platinum/rhodium or platinum/palladium/rhodium.
(27) Platinum, palladium and rhodium are used in varying ratios depending on specific requirements, such as the engine size, fuel used (petrol or diesel), efficiency levels sought, vehicle mass and the manufacturers' design and technology. Platinum has an advantage over the other PGMs, in that it can absorb a wider spectrum of gases. It is the most active of the three metals in CO and HC conversion, it is the least affected by lead and sulphur in the fuel and works well at low temperatures. However, it does not reduce NOx efficiently (a task that rhodium performs well). Palladium has some ability to convert CO and HC, and to reduce NOx, but is easily contaminated and is slow to become operational. Therefore, platinum, palladium and rhodium perform differently in the catalytic conversion required by autocatalysts to remove the noxious constituents.
(28) Moreover, design changes in automotive components typically require lead times of several years. Such changes are costly, requiring substantial R& D and testing to ascertain whether the new model would meet ever-tightening environmental regulations. Automobile manufacturers have indicated that it would not be economically feasible to consider undertaking the R& D required for re-designing, unless there were to be an appreciable and irreversible change in PGM prices or liberalization of environmental protection laws. Clearly, the switching costs for automobile manufacturers go well beyond the costs of the various PGMs involved. Thus, there is rather limited substitutability among the PGMs in autocatalytic applications. Rather than substitution, the complementarity of PGMs is well demonstrated in the field of catalytic converters for cars. Furthermore, diesel engines use only platinum and not palladium converters. The substitution possibilities between palladium and platinum therefore appear limited for these purposes.
(29) The parties have submitted that there is a much more significant scope for the substitution of palladium for platinum in autocatalysts than suggested by the Commission. In this respect Ford, Nissan and Engelhard are stated as being at the forefront of the development of this technology which it is said will be of greater relevance in Europe because of smaller car engine sizes.
(30) During its investigation the Commission has had contact with two of these companies: one has stated that it has always used platinum and rhodium in the production of autocatalysts and any change would require costly design changes. The other company has confirmed that it does manufacture palladium-only autocatalysts.
(31) The Commission recognizes that palladium has substituted for platinum in certain types of autocatalysts in recent years. As stated by the parties this trend is likely to continue to a certain extent. However, the Commission considers that there is a rather limited possibility for any significant substitution of palladium for platinum in autocatalysts because of the cost of design changes and the specific properties of each metal to react with specific pollutants. As mentioned above these properties include the fact that lead and sulphur render palladium inactive and that diesel engines and large gasoline engines require platinum catalysts. According to Johnson Matthey, in evidence of this fact 'many European vehicles are fitted with two-brick catalyst systems, and it is now common to use a palladium/rhodium catalyst in conjunction with another containing platinum. This enables auto makers to take advantage of palladium's efficiency in converting HC emissions, while retaining platinum for its CO activity, and rhodium for its ability to deal with NOx.` The parties agree that palladium cannot be totally substituted for platinum (see parties' reply of 19 March 1996 to the questions following the hearing).
(32) Although the use of palladium has increased in proportion to platinum, the market demand for platinum will continue as it will remain an essential element for use in autocatalysts.
Industrial applications
(33) Platinum is widely utilized in industrial applications, for example as a catalyst gauze for manufacturing nitric acid for fertilizers, and in the glass industry, which uses equipment made from platinum-rhodium alloys for the highly corrosive operating environments needed in the production of high quality LCD glass (used in the screens of computers and televisions). There are no substitution possibilities for platinum in such industrial applications.
Jewellery
(34) Platinum, as explained below, is a global commodity product. The demand for platinum in jewellery is dominated by the Japanese market. Approximately 85 % of the world's demand for platinum for jewellery end-use came from Japanese consumers in 1994. The unique characteristics of the Japanese jewellery market therefore have a crucial influence on the demand for platinum and, accordingly, on whether other metals can substitute for platinum to any significant extent.
(35) The reasons for this high consumption are historical. First, the Japanese have a predilection for purity: platinum satisfies this preference due to its 99,95 % standard of purity and the fact that the metal has a 'whitish` appearance. Secondly, for many years (until 1973) the import of gold into Japan was tightly controlled and the tradition for platinum jewellery therefore developed. Finally, the strength of the yen in recent years, relative to the US dollar (in which platinum is always priced), has supported the demand for platinum as well as other precious metals like gold.
(36) Platinum is the only PGM which is used for jewellery. It is also the most precious among all the precious metals, and in particular, platinum jewellery is more expensive than gold jewellery. In addition to its higher unit cost platinum jewellery is more expensive because: first, platinum jewellery is of a higher purity than gold, and secondly, platinum is harder to work than gold. However, as explained below, neither gold nor other precious metals are substitutes for platinum in the Japanese jewellery market.
(37) The Commission has obtained data allowing it to assess the current market position of platinum versus gold in the Japanese market. In 1994, 29.3 million pieces of jewellery made from platinum, gold or platinum/gold combinations were sold in Japan. As can be seen from Table 1 platinum accounted for 23,2 % of units (pieces) of jewellery, but 57 % of the value of jewellery sales, thus highlighting the much higher unit costs of platinum jewellery.
>TABLE POSITION>
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