Treasure Trove

AUTO CATALYSTS. "The autocatalyst recycling industry has grown significantly over the past decade as greater efficiencies in the recycling process, benefiting from improved PGM and scrap prices, the continued rise in the availability of retired or scrapped autos and more restrictive and proactive regulations abroad, have collectively fostered the expansion," according to Ashok Kumar, Director of A-1 Specialized Services & Supplies Inc., Croydon, Pa. "The recycling industry is maturing as it becomes increasingly more global in its reach. The supply of salvage autocats is not only sourced from the United States, Europe and Japan, but also now flows from Eastern Europe, Australia, New Zealand and a growing number of countries in Asia and Latin America."

Kumar says that availability of reclaimed metal from salvage autocats has grown dramatically throughout the past 30 years, since the installation of the first catalytic converters in 1975. There is no end in sight.

According to figures from Johnson Matthey, a specialty metals company based in Hertfordshire, UK, autocatalyst demand for platinum was pegged to climb by 8 percent to 3.86 million ounces in 2005. That marked the sixth annual successive increase in demand.

Johnson Matthey sees the demand coming from rising sales of light-duty diesels in Europe and tighter restrictions on emissions from light- and heavy-duty diesels worldwide.

Meanwhile, the specialty metals company sees palladium use dipping 1 percent in 2005 to 3.69 million ounces. This is mainly because of a drop in purchases by European auto makers. Johnson Matthey notes that China’s projected growth in light-vehicle production will add fuel to the fire lighted under platinum consumption and will help offset much of the loss in demand in Europe.

What goes into catalysts also comes out—whether platinum or palladium.

"We estimate that by the year 2010, some 2 million ounces annually of palladium will be derived from the recycling of spent autocats, representing nearly one-fourth of new mine supplies of the metal," according to Kumar.

He adds, "Greater amounts of palladium should become available for recycling in coming years as many of the cars manufactured in the late-1990s through 2001, those with converters containing higher loadings of palladium, reach the salvage yard. Additionally, in only four year’s time, some 1.1 million ounces of platinum and 200,000 ounces of rhodium will also be recycled each year."

Prices for the small dealer tend to be all over the charts, depending on demand at the moment. From Pennsylvania through the Midwest, the demand for large foreign catalysts seemed hot this spring. Jobbers reported getting as much as $125 for large foreign catalysts and $84 for those from small foreign cars. Large GM catalysts were bringing $77, and the large domestic catalysts (mainly Chryslers) fetched $52, with small domestic catalysts (Fords) at $42.

These prices varied from site to site and represent payment on less-than-load quantities.

AUTOMOTIVE DEMAND. "The demand for platinum, palladium and rhodium in the manufacture of autocats has increasingly defined the PGM markets. We estimate that nearly 60 percent of newly mined platinum will be consumed by the auto industry in 2006, along with 65 percent of palladium supplies," Kumar projects. More surprisingly, he expects autocat demand for rhodium to exceed available mine output this year, perhaps even for the next few years.

Further, Kumar states that "platinum and rhodium consumption from the autocat sector is projected to grow by some 8 to 10 percent annually throughout the intermediate term, while, in contrast, supplies of primary metal are expected to expand by only 4 to 5 percent."

Auto sales in the developed markets of the United States, Europe and Japan will likely continue to expand at a 1 percent to 2 percent pace in coming years. But a marked increase in demand for new cars will be found in the developing nations, specifically in China, India and other Asian and Latin American countries. Worldwide auto sales have been estimated to reach 100 million units annually by the year 2020, with more than 1.5 billion registered autos.

The U.S. Department of Transportation projects that the number of global registrations could swell to more than 3.5 billion by 2050, assuring a potential steady supply of salvage autocats for the distant future.

RECYLCING LEGISLATION. More stringent emissions standards as mandated by the implementation of U.S. Tier 2 and Euro 4 regulations will require greater loadings of platinum, palladium and rhodium to reduce hydrocarbons, carbon monoxide and nitrous oxide levels in engine exhausts. Tier 2 standards apply to all passenger cars, SUVs and light trucks in limiting nitrous oxide levels and other pollutants. Starting in 2007, regulations will target diesel engines and heavy-duty vehicles.

In Europe, the introduction of Euro 4 standards in 2005 will act to halve current emission levels of nitrous oxides, particulate matter and carbon monoxide in both passenger cars and in diesel engines.

"The EU has already begun discussions on the proposed new Euro 5 standards that will take effect in 2008," Kumar notes. He says the proposed standards call for an 80 percent reduction in particulates and a 20 percent decrease in nitrous oxides for diesel engines and a 25 percent cut in nitrous oxides and hydrocarbons for gas engines.

"The current rate of recycling of more than 27 million vehicles per annum accounts for only about one-half of global new car sales, owing to the remaining inefficiencies of the recycling process and a greater demand for used vehicles and cars overall, particularly in developing countries," adds Kumar.

Governmental regulations and recycling programs to improve recycling rates are currently being established. In the United States, for example, the Department of Energy has outlined a strategy that would enable the recycling industry in the United States to achieve a 95 percent reclamation rate for the value of an end-of-life vehicle (ELV) by the year 2020.

The European Union’s Directive on End-of-Life Vehicles mandates that the last owner can deliver the ELV to an authorized treatment facility without cost and be issued a Certificate of Destruction verifying the proper disposal of the vehicle. By 2007, the responsibility of recycling and the cost of treatment will have to be assumed by the vehicle manufacturer. The goal set by the EU calls for 85 percent of the vehicle’s value to be recycled by 2006, up from prior levels of 55 percent to 65 percent, rising to a level of 95 percent of a vehicle’s value for 2015.

Similarly in Japan, the Automotive Recycling Law that began enforcement in January 2005, requires the licensing of recycling businesses and the collection of fees from the owner of the vehicle to compensate for eventual disposal costs. The objective of the new law is to raise the recycling rate in Japan to 95 percent by the year 2015.

MOUNTING CHALLENGES. Along with the increasing supply of salvage autocats, particularly from Europe, and the recent cyclical high prices in the PGMs comes a heightened competitive environment in the autocat recycling industry. In April 2006, the platinum price posted a high of $1,130 per ounce, palladium recorded a four-year high of $370 per ounce, while rhodium hit a 15-year high of $4,800 per ounce.