A catalytic converter is a device that chemically converts harmful engine exhaust emissions into carbon dioxide and water. In a catalytic converter, the catalyst (in the form of platinum and palladium) is coated onto a ceramic honeycomb or ceramic beads that are housed in a muffler-like package attached to the exhaust pipe. The catalyst helps to convert carbon monoxide into carbon dioxide. It converts the hydrocarbons into carbon dioxide and water. It also converts the nitrogen oxides back into nitrogen and oxygen. The converter was developed in the 1960’s to meet stringent new emission legislation, initially in America, followed by the rest of the world. Since 1975 all vehicle manufacturers have used catalytic converters, and other emission control devices, to meet the required reduced
The PGMs of most economic importance are Platinum, Palladium and Rhodium. The markets for individual PGMs are separate and the volumes traded and prices achieved are independent of one another.
The world market for platinum in 2015 was about 8Moz. Of this, 6Moz was newly-mined and 2Moz originated from recycling. The vast majority of the latter was sourced from auto catalysts and jewellery. Of mine supply, South Africa produced over 4Moz, almost 75% of newly-mined supply.
Above ground inventories of refined platinum are thought to be over 2Moz and declining. The major areas of demand during 2015 were automotive (predominantly auto catalysts) 3.5Moz; jewellery 3.0Moz; industrial 1.6Moz (chemical, petroleum, electrical, glass, medical).
Investment demand, which is usually price insensitive, was marginal during 2015.
Diesel auto catalysts utilise platinum whereas those for petrol engines use palladium. The world market for palladium in volume terms has been slightly higher than platinum (i.e. over 8Moz) for several years. Historically, its price has been a fraction of the platinum price but in recent years, this gap has been closing.
The average annual price of platinum peaked at USD2,174/oz in 2008, fell off sharply to USD1,090/oz in 2009, recovered to USD1,828 in 2011 but has been in decline since. Prices during 2016 have been typically below USD1,000/oz. At this price level, significant production volumes from much of the palladium Recycling in South Africa are uneconomical and will have to be cut back
HOW CONVERTERS WORK CONTINUED
Inside the converter, the gases flow through a dense honeycomb structure made from a ceramic and coated with the catalysts. The honeycomb structure means the gases touch a bigger area of catalyst at once, so they are converted more quickly and efficiently.
Typically, there are two different catalysts in a catalytic converter:
One of them tackles nitrogen oxide pollution using a chemical process called reduction (removing oxygen). This breaks up nitrogen oxides into nitrogen and oxygen gases (which are harmless, because they already exist in the air around us).
The other catalyst works by an opposite chemical process called oxidation (adding oxygen) and turns carbon monoxide into carbon dioxide. Another oxidation reaction turns unburden hydrocarbons in the exhaust into carbon dioxide and water.
In effect, three different chemical reactions are going on at the same time. That's why we talk about three-way catalytic converters. (Some, less-effective converters carry out only the second two (oxidation) reactions, so they're called two-way catalytic converters.) After the catalyst has done its job, what emerges from the exhaust is mostly nitrogen, oxygen, carbon dioxide, and water (in the form of steam).