Navigant Research Blog

Platinum Miners Move into Fuel Cell Sector

Kerry-Ann Adamson — March 18, 2013

March was a big month for Canadian fuel cell stack and system supplier Ballard, with a number of major deals edging the company closer to profitability.  Not only did it announce its move into the Chinese market, through its distributor Azure, for its large scale distributed generation system ClearGen, it also signed an agreement with Volkswagen to develop fuel cell stacks for the automaker’s fuel cell vehicle program.  The most interesting – if least valuable in terms of upfront money – development was the announcement that the South Africa-based PGM Development Fund will make a strategic $4 million investment into Ballard.  In the scheme of things, $4 million is not a huge amount, but the move is significant nevertheless.

The PGM Development Fund is a vehicle for Anglo American Platinum (AmPlat) to make strategic investments into technologies it sees could help the South African economy, and the wider economic development of Africa.  South Africa is the largest producer of platinum-group metals in the world and AmPlat, along with Impala Platinum and Lonmin, controls over 75% of the world platinum market.  These three companies have a long-term view of world development.  If it takes up to 20 years to open a new mine shaft, the planning horizons involved have to be similarly long term.

According to the Johnson Matthey publication “The Platinum Book,” the current demand for platinum comes from four main sectors: auto-catalysts, jewelry, industrial applications, and precious-metals investing.  Longer term, the platinum industry is looking to the fuel cell sector for increased demand.  Navigant Research calculates that today the use of platinum in the fuel cell sector is less than 1,000 ounces annually, but that is growing.  Within the next 10 to 15 years it is unlikely that demand from the fuel cell sector will reach a large bar on a graph like this one, but it will increasingly soak up excess platinum from the market, with companies moving to lending platinum, as is the current norm in the automotive sector. Lending of platinum is when companies pay to loan the metal, instead of outright ownership. At the end of the use of the material it is returned to the owner company, often for refining, and loaned out again. This works with platinum in a number of industries as it does not dissociate over time.

Market Interests

Ballard is the globally dominant low-temperature fuel cell stack supplier.  It controls over 60% of all PEM stacks worldwide, excepting Japan, and it is likely to remain the leader for some time to come.  By taking a stake in the leading supplier of platinum-loaded fuel cell stacks, AmPlat is securing market access for its product.

The funding will also buy AmPlat influence in the future development of Ballard.  We will almost certainly see increasing interest from Ballard in the South African market: within the next 2 years or so a joint venture, based in South Africa, and then longer term manufacturing capability located in-country.

After all, through clear marketing and promotional activity, platinum miners have been manipulating market interest and uptake in platinum for decades.  It was only a matter of time before they started to influence the fuel cell sector as well.  We suspect this is one of the opening salvos in an increasing interest and activity from platinum miners in this sector – and don’t be surprised if Ballard starts more aggressively promoting fuel cells in general.

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