The world’s three largest platinum producers Anglo American Platinum (Amplats), Impala Platinum and Lonmin are all investing in projects related to fuel cell technologies, which generate electricity that can power vehicles by combining hydrogen and oxygen over a platinum catalyst.

​But analysts doubt fuel cell vehicles will rival the growth of their electric counterparts, mostly because battery recharging stations are less costly and already more widespread than hydrogen refuelling stations.

“As out of the two new technologies only fuel cells use platinum, I guess the miners think they have no choice,” Macquarie analyst Matthew Turner said. “But people are buying electric cars…and that’s not the case for fuel cells.”

Amplats, which has invested about $35 million in the last five years in companies developing new uses for platinum, mostly through fuel cell technology, is mindful of the stakes.

“I don’t want Anglo American Platinum, or any of our partners or customers to be a Kodak,” Amplats Chief Executive Chris Griffith said last week, referring to the once mighty photography pioneer that was slow to transition to digital photography.

Eoin Treacy's view

Platinum miners are not the only companies making big bets on hydrogen fuel cells. Toyota’s decision to release its Mirai fuel cell vehicle later this year and to open its patents to developers highlights their efforts to pioneer new technologies. After all it was Toyota’s Prius that was the first mass market hybrid vehicle. 

Nevertheless, electric cars are gaining increasing traction as solar cell efficiency increases. There is also the potential for wind turbines to be smaller and less noisy. With the advent of home batteries the outlook for electric vehicles is looking even more promising.
 
Cost trumps just about every other consideration but the source of the power that drives an electric or hydrogen fuel cell car is probably the second most important question for many people. At present most electricity is produced using coal or natural gas while most hydrogen is derived from reforming natural gas. This means that the environmental argument is a wash. However if we look to the future the potential for electricity to be produced using domestic renewable means outweighs the potential for hydrogen to become a mass market product. Toyota is then betting the low cost and abundance of natural gas is going to persist well into the medium term rather than specifically betting on the environmental argument.

The long-term ratio of platinum/gold highlights platinum’s outperformance from 1997 until 2011. Prior to the precious metal bull market platinum traded at a premium to gold most of the time and discounts rarely lasted very long. The situation since 2011 is different and the evolution of electric cars may be the culprit.

Platinum prices are testing the $1100 area which offered support in March and steadied additionally today. A sustained move above $1200 will be required to begin to suggest a return to demand dominance beyond the short term.