Thursday, April 24, 2008

New silver catalyst for diesel emissions should pump demand

As reported yesterday Mitsui Mining and Smelting claims to have developed a new form of catalytic converter that would use silver instead of Platinum.

Should this technology be proven it's obvious car manufacturers would flock to a technology using a silver which is currently less than 1% the price of Platinum.

Mitsui Mining new autocatalyst uses silver, not platinum
Wed Apr 23, 2008 3:47am EDT TOKYO, April 23 (Reuters) -

Mitsui Mining and Smelting Co Ltd (5706.T: Quote, Profile, Research) said on Wednesday it has developed a new catalyst for diesel engine cars that replaces the use of platinum with silver, a less conventional but much cheaper metal.

"Silver will totally replace platinum in this new autocatalyst that we've developed," a company spokesman said.

By substituting platinum with silver, the cost of precious metals in the production of autocatalysts, which clean car exhaust fumes, would be cut by more than 90 percent, the company said.

Spot silver is currently trading at around $17.70 an ounce, compared with platinum at around $2,030.

The spokesman said Japan, Europe and the United States are all planning to impose tighter rules on exhaust emissions for heavy-duty vehicles, such as those used in construction and farming, from 2012.

"We hope that this catalyst will be used in diesel engines for those vehicles, and this is the market we are targeting," he said.

Platinum specialist Johnson Matthey Plc said last November that platinum demand from automakers for catalytic converters would climb 2.3 percent to 4.24 million ounces in 2007 on the back of robust sales of light-duty diesel vehicles in Europe.

Platinum and its sister metal palladium are employed in varying amounts in autocatalysts to filter out carbon monoxide and particulate emissions.

I have a couple of questions about this technology

1. When will we see this go commercial?
2. How much silver vs. Platinum is needed?
3. Will the cheaper price encourage poorer countries to adopt emission controls?
4. After the useful life of the device will the silver recoverable if so how much?

Yet again we have another potential industrial use for silver and with the current cost for platinum there will be a huge incentive for substitution. If this technology if brought to market in a timely manner (before oil runs out) it has the potential to add a couple million ounces a year to silver demand, Good news in a month where prices continue to get the shit kicked out of them.

I was expecting another run up before the summer doldrums set in but unless investors catch on that the dollar can't improve for any fundamental reason, we could be facing a long sideways trading season.

Today's break below $17 and $900 does not look to be a good short term signal, but does give us some extra time to accumulate, make use of your opportunties!

This might also be a sign to take profits on Platinum if you have any,