Anglo American says world is short of rhodium

Market: Metals
20/02/20

UK-Australian mining firm Anglo American expects demand for rhodium catalysts to remain high as automakers work to reduce emissions, but cautioned against expectations for surging prices.

"An automobile chief executive will not get fired for spending fifty dollars a car extra on PGMs [platinum group metals] but they might get fired for not meeting their emission targets," chief executive Mark Cutifani said today.

Rhodium is used in catalytic converters for gasoline-fuelled cars to reduce toxic nitrogen oxide emissions. Unlike palladium, which is also used in catalytic converters along with platinum, rhodium has no obvious substitutes. Higher vehicle emission standards around the world, including China, and fall-out from the Volkswagen diesel emissions scandal have created a surge in demand for rhodium catalysts, with little flexibility to increase production.

Rhodium prices rose to $12,700/troy ounce (toz) today after breaching the $12,000/toz threshold yesterday — their highest in at least 15 years, based on price quotes from UK specialty chemical producer Johnson Matthey. Prices have risen by 110pc from $6,050/toz at the start of this year.

Cutifani refused to be drawn on whether current high prices are a bubble. But he cautioned against relying on short-term price movements, adding that what can rise quickly can fall twice as quickly.

An important element of the price spike is an unexpected rise in demand for catalysts for gasoline vehicles after the emissions scandal reduced demand for diesel cars and focused attention on meeting emission standards.

The cost of refining PGMs is high and most of the world's rhodium is produced in South Africa by a small number of producers. The company has no immediate plans to increase investment in rhodium production in response to the price spike.

Caroline Messecar

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