Peaking into the Future

Over the past few years a debate has raged over the concept of ‘Peak Oil’ – the notion that we are nearing or may even have passed a global peak in oil production, and will soon be into a time of declining yields and rising prices. The concept originally comes from Shell geologist Dr M.King Hubbert, who first produced his famous bell curve of US oil production in the 1950s to successfully predict US peak production in the 1970s. However, he also predicted global peak oil production in 1995, while current estimates put it anywhere from 2006 to 2020 or even 2030. While it is self evident that any finite commodity must eventually pass a peak of production, the debate over Peak Oil has often shed more heat than light, with some very polarised and entrenched opinions on display.

However, it has as a by-product also managed to turn attention to the consumption of various other finite resources, and there was a rather sobering paper on two of these – platinum and phosphorus – at the recent Ammonium Nitrate/Nitric Acid meeting in Little Rock, Arkansas, presented by Harald Sverdrup of Norwegian precious metals firm KA Rasmussen.
The world of phosphorus is – with the possible exception of MAP/DAP – just a bit too far downstream for this magazine (although the implications are rather more worrying, given that it is a key component of our own bodies and not amenable to ‘substitution’ in the same was that oil is), but peak platinum is worth considering for a moment, as a vital catalyst in our industry (especially in nitric acid production) and many others besides, from fuel cells to vehicle catalytic converters, and especially since it is a platinum refiner who gave the paper and who therefore is presumably better placed than the rest of us to discuss its future.

KA Rasumssen have modelled platinum, both production and in circulation in various stockpiles and ‘sinks’ – from jewellery to automobiles – and in the ground, as well as ‘burn off rates’, where platinum is simply lost without being recovered. One disappointing figure is that only 25% of platinum in automotive catalysts is recovered, for example. Much of it is simply lost in the vehicle exhaust over the lifetime of the catalyst, and converters are not always recovered from vehicles when they are scrapped. There are many imponderables; the markets for precious metals can be distorted by over-claiming of reserves (there are an estimated 20,000 tonnes of gold worldwide which exist only on paper, for example). The price sensitivity of when people will begin to melt down jewellery to make catalysts or vice versa is also hard to model, and the accuracy of forecasts of various grades of platinum-bearing rocks and their extent can be difficult to predict accurately. However, with these caveats in mind, Mr Sverdrup’s conclusion was nevertheless a stark one; we have probably reached peak platinum production already, and the future is likely to see rising prices and lower availability. Global production of platinum group metals (PGMs) has increased 250% since 1997, and at present rates of depletion some estimates suggest there may only be 14 years of supply left in existing mines. Rhodium can be used to substitute in catalytic converters, but rhodium is itself mainly a by-product of platinum mining. Some have even suggested that this may be another nail in the coffin of fuel cells for vehicles, which rely on platinum to catalyse the oxidation of hydrogen to water.

As with all projections, this one relies on everything continuing as it does at the moment, and an improvement in recycling of platinum could change the figures quite markedly. From this it seems clear that we need to husband our platinum resources more carefully; losing 75% of platinum that finds its way into vehicles is clearly not a sustainable practise. The chemical and petrochemical industries are relatively more efficient at recovering precious metal catalysts, as our article on the subject last issue demonstrated, but even there 40-50% of metal can be lost during a production campaign, and it is clear that there is room for improvement.
Platinum prices stood at about $1,350/troy oz over the past few weeks. Although this is down on the 2008 peak of $2,100, it is still high by the standards of the first half of the decade, when prices used to average $700-800/oz, or the previous decade, when they stood at $300-400/oz. It could be that the market is sending a signal which we would be wise to listen to.

Welcome to Nitrogen+Syngas Blog!

My name is Richard Hands, and I'm the editor of Nitrogen+Syngas magazine at BCInsight Ltd. Over the coming months, our aim is to use this webspace to expand on some of the issues that make it into the editorial columns of our magazines, as well as to provide a platform for some guest columnists.

We hope you enjoy it and find it interesting. Feedback is, of course, welcomed.

Richard Hands