Key products for innovation
Energy transition drives up prices for precious metals
4/10/2023 8:14 am
Silver, platinum, palladium – the energy transition will not be possible without them. Because the technologies behind sustainable energy production cannot do without these precious metals. This could also lead to bottlenecks in the future.
With the expansion of renewable energies, the demand for precious metals and, as a rule, their prices will increase, according to industry estimates. For example, industry needs silver for the manufacture of solar systems, for sensors in wind turbines and for electromobility, said York Tetzlaff, Managing Director of the Precious Metals Association in Pforzheim. The precious metals platinum and iridium are required, for example, in the production of hydrogen. These would also be used in the development of catalytic converters for hydrogen cars.
“Overall, precious metals are key products for innovations and the energy transition. This applies in particular to silver and the so-called platinum group metals,” explained Tetzlaff. These include platinum, palladium and iridium. This is because precious metals are corrosion-resistant, particularly electrically conductive and resistant to acids and alkalis. According to the association, silver paste is used in 90 percent of all silicon photovoltaic cells. These are the most commonly used solar cells. “Sunlight hitting these silicon cells generates electrons that are collected by the silver conductor and bundled into an electric current,” the experts explained. According to the information, silver is also used in catalytic converters and in electrical contacts.
The Silver Institute, an American industry association, published a forecast in 2018 according to which around 45,000 tons or 1.5 billion ounces of silver will be needed by 2030 to promote renewable energies. “The ongoing revolution in green technologies, fueled by the exponential growth of alternative fuel vehicles and continued investment in solar energy, is expected to further fuel global industrial demand for silver over the next decade and beyond,” the report reads.
Platinum for key technologies of the energy transition
Unlike the price of gold, which is primarily influenced by demand from professional investors such as central banks, the price of silver is particularly dependent on industrial development, as Tetzlaff said. The demand in the industry is significantly higher than that in the jewelry and watch industry. “But how prices develop is always a look into the crystal ball.” That depends on many factors and cannot be reliably predicted. Tetzlaff added that there is a supply surplus for platinum, which is likely to shrink because of the demand for hydrogen production. There are also exchange effects: in the automotive sector, for example, platinum is used instead of palladium. Because the latter is around 50 percent more expensive than platinum, although the price has recently fallen significantly.
“Platinum plays an important role in particular for fuel cells and hydrogen electrolysis – and thus for possible key technologies of the energy transition such as long-term storage and power-to-gas,” explains the “Energy Systems of the Future” (ESYS) initiative of the German Academy of Science and Engineering, the Nationale Academy of Sciences Leopoldina and the Union of German Academies of Sciences on their website. Palladium, on the other hand, is needed in the energy transition primarily for capacitors, printed circuit boards and also for hydrogen electrolysis. “So power-to-gas systems cannot do without palladium.” According to ESYS, both metals are classified as potentially critical, i.e. they are of great economic importance, are difficult to replace and come from rather unreliable supplier countries. For example, Russia is the largest supplier of palladium. Tetzlaff explained that more than 40 percent of the primary supply came from there. “Due to the importance for the European industry, there have been no sanctions so far.”
Iridium supply crisis imminent
Unlike gold, for example. Here, the EU imposed an import ban on Russian gold because of Russia’s attack on Ukraine. However, according to the expert, the market had already reacted beforehand by excluding Russian refiners from London trading in early March 2022. The German raw materials agency DERA sees the greatest supply risks with regard to the production of hydrogen with iridium. According to a special issue, the precious metal is extracted as a by-product of palladium and platinum production, especially in South Africa and Russia. The annual production of iridium is in the single-digit ton range, a significant increase is unlikely.
In the past, price explosions, for example after production outages, would have shown the uncertainty about the supply situation. The ESYS initiative warns that fewer and fewer actors are controlling ever greater amounts of raw materials. “Individual countries and companies can exploit their market power and make access to important raw materials more difficult.” Germany needs a long-term raw materials policy in order to promote open and transparent markets and high environmental and social standards. “More recycling, mining in Europe and the deep sea and strategic investments in raw materials projects can improve security of supply,” say the experts. Because if metals become too expensive, investments in more climate-friendly technologies become less economical.