Platinum's Unique Properties

Some metals, like gold, derived their value from their historical role as currencies. Some are purely industrial metals with unique physical properties, like tungsten and titanium

Platinum is a unique and valuable metal with a wide range of industrial and investment applications. Here's a closer look at its properties, uses, and how it can be a crucial metal in high-tech and green energy applications.

Platinum's Unique Properties

Some metals, like gold, derive their value from their historical role as currencies. Others are purely industrial metals with unique physical properties, like tungsten and titanium, which we covered in “Tungsten—The Secret High-Tech Metal” and “Investing In Titanium: Stronger than Steel and Denser than Aluminum.”

However, another category of metal derives its value from its chemical properties. The platinum metal group, which includes platinum as well as palladium, rhodium, ruthenium, osmium, and iridium, is unique for its ability to catalyze chemical reactions.

Catalysis is the ability of a compound to speed up or make possible chemical reactions that would otherwise be slow or impossible.

It is for this application that platinum and the other metals in the same group are mostly used. The large majority of consumption is driven by the automotive industry, which uses platinum, and sometimes palladium and rhodium, in catalytic converters in ICE (Internal Combustion Engine) vehicles to reduce pollution.

A small portion of these metals are also used for jewelry and investment purposes, but far less than gold and silver. And as we will see, it could be a crucial metal in high-tech and green energy applications, beyond the current ICE catalytic converters and chemistry uses.

Platinum is a very rare resource overall, with an abundance in the Earth's crust of about a millionth of 1%. This makes the discovery of platinum ore very difficult, at least concentrated enough to be economically viable to mine.

Most of the production of platinum is done in South Africa, followed by Russia and Zimbabwe. Even then, this is a relatively small production, with South Africa producing only 140,000 kg in 2022 and Russia only 20,000 kg.

To compound this rarity, only a few deposits are actually known, with South Africa's resources being essentially concentrated on the Bushveld Complex. This leads to outstanding efforts being made to find platinum, with for example the Zondereinde Mine at 1,100-2,300 meters (0.6-1.4 miles) below the surface, operated by Northam (NPH.JO).

Platinum Price

Platinum, a mostly industrial metal, has historically been very sensitive to boom and bust periods. For example, it exploded in price from 2006-2008, before crashing, before rebounding. It also hit a multi-decade low in the bottom of the Covid-19 panic in 2020 at $740/kg.

It has since rebounded to $1,000/kg, but it still lingers far from the previous higher prices of 2008 or 2010-2014, even without taking into account global inflation.

This gives platinum a lot of space to go up and little to go down, in the sense that any durably lower price would lead to mine closure.

As South Africa is by far the world's largest platinum producer, specific circumstances in the country can affect the global platinum market.

For example, the country has suffered from chronic political and social instability, as well as decaying infrastructure (like an increasingly unstable electric grid) regularly threatening industrial and mining production.

Another potential factor is the fluctuation of the value of South Africa's currency the Rand. A stronger Rand can weaken the miner competitivity (by increasing local costs measured in USD) and alternatively, a weaker Rand can boost the productivity of South African miners as they sell their products in USD.

In the same way, a weaker dollar usually removes some incentive from platinum mining. This can decrease supply, and in the process, lead to higher prices.

How Does Platinum Work

As catalytic converters are the main application of platinum, it is important to understand what they do.

How platinum atoms work in a catalytic converter is by absorbing oxygen (O2) molecules and breaking apart the oxygen-oxygen bound. It can then give this single oxygen atom to toxic carbon monoxide (CO), turning it into non-toxic CO2.

The same type of process is at play in turning nitrogen oxides and ethylene into harmless CO2, N2, and water.

It is the universality of platinum catalytic activity that makes it unique. Most other forms of catalysts, like enzymes and organic catalysts (which won the 2021 Nobel Prize In Chemistry), tend to be very specialized.

Platinum instead, with the help of heat (provided by the ICE engine in the case of catalytic converters) breaks down many harmful molecules all at once.

The robustness of the reaction and the resistance of the metal to damage is also positive, as it allows the