Platinum group metals (PGMs) are crucial for hydrogen-energy-enabled decarbonisation, especially when employed in proton exchange membrane (PEM) technology used in electrolysers and fuel cells, reports London-based global authority on platinum investment, the World Platinum Investment Council (WPIC).

Hydrogen’s crucial role in the energy transition is largely a result of its versatility as a fuel, chemical feedstock and energy carrier, particularly in the form of green hydrogen, which is produced using renewable-energy resources such as wind or solar PV.

As such, the value of hydrogen in decarbonisation efforts is becoming increasingly recognised, states WPIC research director Edward Sterck.

“At the same time, it is increasingly being appreciated that having a secure stake in the value chains of climate-safe energy technologies can boost a country’s economic competitiveness, energy independence and national security,” he adds.

In the US, Sterck explains that critical minerals are defined by the Energy Act of 2020 as minerals which have a supply chain that is vulnerable to disruption and which serve as an essential function in the manufacture of a product, the absence of which would have significant consequences for the economic or national security of the US.

The US Critical Minerals List includes the PGMs platinum, palladium, iridium, rhodium and ruthenium – all metals that are becoming increasingly important in technologies driving the clean energy transition.

Similarly, the European Commission’s most recent review of critical raw materials, published in 2023, includes PGMs among the 34 critical raw materials needed to ensure secure access to resources supporting the EU’s climate and digital objectives, while maintaining industrial competitiveness and ensuring the functioning of the single market.

“The UK recognises platinum and palladium as critical minerals, with iridium and ruthenium on its watchlist,” notes Sterck.

In China, platinum is identified as a strategic metal crucial for PEM technologies.

Along with lithium, nickel and cobalt, platinum is specifically mentioned in the China State Council’s New Energy Vehicle Industrial Development Plan for the period between 2021 and 2035. This plan encourages Chinese companies to improve their capacity to secure long-term supplies of these rare and in- demand elements. Indeed, trade data shows that China has been importing significantly more platinum than its immediately identifiable needs, since 2019.

Supply, Demand Outlook

This year, Sterck highlights, is the second consecutive year in which the platinum market will experience a significant deficit.

“Our two- to five-year forecast projects deficits through to 2028, with annual platinum deficits to average 770 000 oz from 2025 to 2028, or 9% of average demand,” he notes.

Looking forward, Sterck says the WPIC expects the platinum market’s ongoing deficits to require the market to continue drawing heavily from above ground stocks to meet demand requirements.

However, the company estimates that above ground stocks will be depleted by the end of 2028.

“This leaves the question of whether the current platinum price is sufficient to stimulate new supply or weigh on demand,” explains Sterck.

He adds that this outlook has been derived based on robust demand, with positive movement forecast owing to the diversity of platinum’s end uses, against limited supply, particularly in light of the sustained weakness in the PGM basket price, which is causing miners to implement restructuring initiatives and, in some cases, mine or shaft closures.

However, despite these challenges, Sterck points out that automotive demand for PGMs remains the largest driver of platinum consumption, accounting for about 40% of yearly demand. In 2023, automotive demand grew significantly by 16%, reaching 3.2-million ounces.

“Automotive demand for platinum is resilient and this growth is being achieved despite rising battery electric vehicle market share and a reduction in internal combustion engine vehicle production.

“It is supported by factors including stricter emissions legislation, increased demand for hybrid vehicles, and platinum-for-palladium substitution in the autocatalysts manufactured for gasoline vehicles,” he says.

“The anticipated decline in automotive platinum demand owing to electrification of the global fleet will happen slowly,” adds Sterck, noting that only 1% of yearly demand erosion is projected to occur between 2023 and 2028, when automotive platinum demand will still be around the three-million-ounce level.

In terms of hydrogen demand for PGMs, he points out that there are not many 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 hydrogen market could account for 11% of total platinum demand by 2030, increasing from 40 000 oz in 2023 to about 900 000 oz in 2030, reveals Sterck, adding that this will be driven primarily by the use of platinum in upstream – electrolyser, and downstream – hydrogen fuel cell, applications.