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Why Platinum is a Strategically Important Metal

Edward Sterck, Director of Research, the World Platinum Investment Council

The hydrogen economy is building momentum, with green hydrogen electrolysis expected to increase 30-fold to around 500 gigawatts by 2035. There are not many established commodities that offer the prospect of significant growth in demand from a new end-use segment, as platinum does through its importance to the hydrogen economy. The pressing need to decarbonise is widely recognised and platinum-based proton exchange membrane (PEM) technologies are playing a significant role in the energy transition. While hydrogen-related demand for platinum is currently relatively small, it is expected to grow substantially throughout the remainder of the decade and beyond, reaching as much as 35 per cent of total annual platinum demand by 2040.

Forecast growth in platinum demand from electrolysers and FCEVs
Forecast growth in platinum demand from electrolysers and FCEVs

In this regard, platinum’s strategic and economic importance is acknowledged, with the United Sates, United Kingdom, European Union and China identifying its critical mineral status, while legislative drivers, including the US Inflation Reduction Act, further support platinum demand from PEM technologies by accelerating growth in green hydrogen production and fuel cell electric vehicle (FCEV) adoption. The need for energy independence is also spurring on investment in hydrogen that is beneficial for platinum. Notably, reflecting the importance of green hydrogen, government incentive packages have increased from US$50 billion in 2021 to almost US$300 billion only two years later.

Platinum & PEM

Platinum is essential to PEM applications due to its unique chemical and physical properties. PEM technology is used in both electrolysers to produce hydrogen and in fuel cells, which power FCEVs, as well as providing power for stationary applications.

Hydrogen – the most abundant element in the universe – is already used as a fuel source in industry. As it contains no carbon, it produces zero emissions, only water. However, its credentials as a truly sustainable fuel source depend upon the way in which it is made. To produce hydrogen through electrolysis, an electric current is used to separate water into its component elements – hydrogen and oxygen. When the electric current is derived from a renewable source – solar photo voltaic panels or wind turbines, for example – it is known as ‘green’ hydrogen, an energy carrier that can be used in a wide range of applications to replace fossil fuels. For example, green hydrogen can be used as a feedstock in the production of fertilisers instead of natural gas and as a fuel to power hydrogen FCEVs.

Platinum, in conjunction with iridium, is used as a catalyst in PEM electrolysers, one of the two leading electrolysis technologies available in the market. PEM electrolysis was developed in the 1960s but only commercialised at scale relatively recently, offering advantages over other electrolysers, being compact and more able to cope with the intermittent nature of electricity from wind or solar sources.

PEM electrolyser (WPIC).
PEM electrolyser (WPIC).

A PEM fuel cell works by combining hydrogen and oxygen to generate electricity, with heat and water as the only by-products. Molecules of hydrogen and oxygen react and combine using a PEM which is coated with a platinum catalyst.

PEM fuel cell (WPIC).
PEM fuel cell (WPIC).

Platinum is especially suited as a fuel cell catalyst as it enables the hydrogen and oxygen reactions to take place at an optimal rate, while being stable enough to withstand the complex chemical environment within a fuel cell, as well as the high electrical current density, performing efficiently over the long-term.

Fuel cells share many of the characteristics of a battery – silent operation, no moving parts and an electrochemical reaction to generate power. However, unlike a battery, PEM fuel cells need no recharging and will run indefinitely when supplied with hydrogen. A fuel cell can have a battery as a buffer to store the electricity it is generating.

A single fuel cell alone only produces a few watts of power; several fuel cells can be stacked together to create a fuel cell stack. When combined in stacks, the fuel cells’ output can vary greatly, from just a few kilowatts of power to multi-megawatt installations. Fuel cell stacks that do not use platinum-based PEM technology need to be much bigger to achieve similar power outputs. This makes platinum essential to the efficiency of end-user mobile applications and its use ensures that the fuel cells are compact enough for use in FCEVs.

Critcal mineral status

WPIC research indicates that, given proposed PEM electrolyser build-out, platinum’s role in enabling the achievement of global decarbonisation targets could be highly significant. In fact, platinum-based PEM technology could alone deliver up to eleven per cent of global CO2 emissions-reduction targets as set out in the Paris Agreement, by 2030, if all the currently planned hydrogen projects come to fruition.

It is increasingly being appreciated that having a secure stake in the value chains of climate-safe energy technologies, such as green hydrogen production, can boost a country’s economic competitiveness, energy independence and national security.

Potential PEM technology contribution to CO2 reduction targets (WPIC)
Potential PEM technology contribution to CO2 reduction targets (WPIC)

For example, the US defines critical minerals as ‘those nonfuel minerals which have a supply chain that is vulnerable to disruption and which serve as an essential function in the manufacturing of a product, the absence of which would have significant consequences for the economic or national security of the US’. Its critical mineral list features the platinum group metals (PGMs) platinum, palladium, iridium, rhodium and ruthenium as individual elements, reflecting the importance of PGMs as raw materials in technologies that support the clean energy transition.

In Europe, the European Commission’s Action Plan on Critical Raw Materials, 2020, focuses on developing secure, resilient, diversified and sustainable supply chains that foster the transition towards a green and digital economy. The plan incorporates a list of 30 critical raw materials, designated as such based on economic importance and perceived supply risk, which include the same PGMs as those listed in the US, citing their use as chemical and automotive catalysts as well as their use in electronic applications and fuel cells.

In China, platinum is recognised as a metal of strategic importance for its use in automotive and industrial applications as well as in PEM technologies. This is accentuated by the lack of domestic platinum production in China. Along with lithium, nickel and cobalt, platinum is specifically mentioned in the China State Council’s New Energy Vehicle Industrial Development Plan (2021-2035), which encourages Chinese companies to improve their capacity to secure long-term supplies of these rare and in-demand elements.

Legislative drivers

The US Inflation Reduction Act (IRA), 2022 further consolidates the strategic importance of hydrogen technologies and, consequently, platinum. The IRA aims to see investment of US$369 billion over ten years into energy and climate programmes, injecting significant sums into clean energy and electric vehicle incentives and programmes.

Following on from the IRA, the US’s National Clean Hydrogen Strategy was announced earlier this year, with the stated ambition of enabling multi-gigawatt scale electrolyser manufacturing capacity. In parallel, the US’s Infrastructure Investment and Jobs Act (IIJA), enacted on 15 November, 2021, has a variety of initiatives to stimulate new markets for clean hydrogen, including US$1 billion of funding for a clean hydrogen electrolysis programme, aimed at improving the efficiency and cost-effectiveness of electrolysis technologies by supporting the entire innovation chain – from research, development and demonstration to commercialisation and deployment – to enable US$2/kg clean hydrogen from electrolysis by 2026. The IIJA also provides US$8 billion of funding for the provision of Regional Clean Hydrogen Hubs.

European energy independence

Global energy prices, which were already rising due to strong demand caused by the post-pandemic economic recovery, surged to record highs last year – and remain volatile – following recent geopolitical events. Countries are now looking at ways to establish energy independence

In Europe, the ‘REPowerEU: Joint European action for more affordable, secure and sustainable energy’ plan, states that the case for a rapid clean-energy transition under the European Green Deal has never been stronger and clearer.

REPowerEU calls for the creation of a ‘Hydrogen Accelerator’ to develop integrated infrastructure, storage facilities and port capacities.

Among other actions, REPowerEU calls for the creation of a ‘Hydrogen Accelerator’ to develop integrated infrastructure, storage facilities and port capacities. It estimates that, with the right investment, green hydrogen could replace between 25 and 50 billion cubic metres per year of imported Russian gas by 2030. This would require a doubling of the 5 million tonnes of green hydrogen production already targeted for 2030 under the European Green Deal, bringing the new target to 10 million tonnes. It is expected that the balance would come from imports of green hydrogen.

Clearly, electrolyser capacity will need to grow if the intentions of REPowerEU for green hydrogen production are to be met, and the EU is looking to install some 80 gigawatts of electrolyser capacity by 2030, up from a pre-crisis plan of 40 gigawatts. The electrolyser capacity required to achieve the intentions of REPowerEU could lead to a significant, incremental increase in platinum demand.

PEM technologies and platinum demand

While PEM electrolysers are a key technology for the production of green hydrogen, fuel cells have higher platinum loadings and are expected to be a far bigger driver of hydrogen-linked demand for platinum. Electrolysis and fuel cell markets are expected to account for up to 20 per cent of total platinum demand by 2030, reaching as much as 35 per cent of total annual platinum demand by 2040.

As hydrogen-linked demand for platinum grows through the decade, platinum is likely to be increasingly seen as a proxy for investment exposure to green hydrogen, given that green hydrogen itself is not a directly investible commodity.

EDWARD STERCK

EDWARD STERCK is the director of research at the World Platinum Investment Council (WPIC). Prior to joining WPIC, Edward spent over 15 years in sell-side equity research, where he focused on the mining sector, including coverage of major global platinum producers and diversified miners.

In addition to researching mining equities, he has conducted supply/demand analyses for platinum, diamonds, and uranium. Edward studied geology at the UK’s Royal School of Mines, Imperial College, and is a fellow of the Geological Society.

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Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
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KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.