Valuable and precious, Gold, for example in jewelry, is a popular go-to for gifts during the holidays. Who knew that gold’s luster would be dimmed by a metal that “scrubs your exhaust,” as the New York Times phrased it? It may still not end up under many Christmas trees, but Palladium, an “obscure and far less sexy rival” metal for the first time in sixteen years leapfrogged gold in metal market prices last week, hitting a record high last Wednesday.
Writes the New York Times:
“It is an impressive dethroning aided by economic shifts, antipollution legislation, union campaigns by mine workers and global trade negotiations. Until recently, palladium was perhaps best known for sharing a name with several popular entertainment venues and for powering the fictional arc reactor mechanism hooked up to Iron Man’s heart.
Its primary purpose is far less glamorous: More than 80 percent of the world’s palladium is used in the catalytic converters that help vehicles manage their pollutant output.”
Usage in passenger cars – in response to regulatory efforts to reduce tailpipe emissions — has been one of the key drivers of Palladium demand, and while analysts expect a record high demand this year, softening car sales and other factors may dampen demand going forward. However, considering Palladium is largely a “co-product” metal recovered via Platinum mining in South Africa and Nickel mining in Russia, it is considered extremely rare, which has tightened supply and driven up prices.
U.S. import dependence for the metal is pegged at 45 percent, with our lead suppliers being South Africa, accounting for 30% and Russia accounting for 25% in 2017. According to USGS, the sole domestic PGM-mining company — at one point owned by Russian investors — was sold to a South Africa-based mining company in May 2017.
Not surprisingly in light of current market developments, Russia – arguably not one of the U.S.’s best trading partners – is looking to step up Palladium production in the coming months.
Thankfully, as part of the Platinum Group Metals, which was included in DOI’s Critical Minerals list earlier this year, Palladium is on the United States’ government radar. However, we have yet to see comprehensive action to follow the release of the critical minerals list. With our competitors – led by China and Russia – not sitting idly by in the global resource race, we cannot afford to get complacent, and must implement policies conducive to harnessing our own domestic resource potential. As we previously argued:
The case of Palladium should be another catalyst (pun intended) for policy makers to formulate policies conducive to domestic mineral resource development.