By far the largest use of palladium today is for automobile catalytic converters. Based upon some estimates the 450 million automobiles in the world today is projected to more than double in the next 30 years requiring a growing use of palladium. And, while some forecasters suggest palladium recycled from scraped automobiles will become a large factor in the supply/demand price equation for palladium in coming years, other factors will mitigate these projections.

First, as mentioned, the growth in the number of cars in the world is expected to continue unabated with an increasing number of cars each year, each required to meet increasing environmental standards. Second, many of the cars reaching the end of their useful life in developed countries of the world are increasingly finding their way to less developed countries as used cars. Some used cars simply gravitate there; others are even being refurbished and then freighted.

This will delay and may eliminate the recovery of metals in many of these cars. Working against some of these gains will be increasing fuel economy and improved engine and catalytic technology, both of which will reduce the level of PGM consumption in cars.

Diesel engines operate at lower temperatures than gasoline engines and, to date, platinum is better suited as a catalyst in converting CO, NOx and hydrocarbons to harmless emissions at the lower temperatures. However, when it comes to reducing or eliminating DPM, which is essentially carbon, temperatures must be increased in order for the carbon to be oxidized before being exhausted. At the higher temperatures palladium may be important, as it not only reacts well at higher temperatures, but it can tolerate higher temperatures better than platinum. Further, with palladium currently at a steep discount to platinum there is an economic incentive to develop technology using palladium.

In this regard, a large European automobile manufacturer recently mandated a research and development effort to examine and advance palladium-based technology for diesel catalytic converters. The reason is apparent. In Europe, 44 percent of the cars built in 2003 were equipped with diesel engines and recent CAFÉ (fuel economy) standards announced by China, will ultimately result in a similar percentage of cars built by China’s surging car industry to be diesel. Thus, a growing concern over insufficient supplies of platinum to meet this growing diesel demand, placing urgency in finding a way to use palladium for this application.

One remaining obstacle to perfecting this palladium technology is the sulfur content of diesel fuel. Sulfur tends to collect on palladium more than on platinum. And at higher temperatures the sulfur tends to generate sulfates that are then exhausted. Sulfur will be sharply reduced in diesel fuel in the U.S. in 2006 enhancing the opportunity for palladium technology for cleaning diesel emissions. Knowing this, Stillwater Mining Company is currently having a palladium catalytic converter and DPM filter fabricated using palladium to test with low sulfur fuel in our mine operations.