Palladiumis hot metal; price risen over 60% and good mining investment opportunity
Palladium is now officially the most valuable element out of the 4 major precious metals in the world.
The critical shortage of palladium has driven its prices to all-time highs. An essential part in making pollution-control devices for automobiles, palladium prices have increased nearly 60% in the last year. In other words, palladium is now much more expensive than gold.
Where Does Palladium Come From?
It is a shiny white metal that’s part of the 6 platinum-based group metals – Platinum, Iridium, Osmium, Rhodium, Ruthenium, and of course, Palladium.
Approximately 80% of the entire palladium in the world is used in catalyst converters that are used in the exhaust systems of gas powered vehicles. Palladium helps turn the toxic pollutants into water vapor and carbon dioxide (which is much less harmful).
This rare metal is also used in making jewelry, dentistry, and electronics. Russia accounts for the 40% of the global palladium production, making it the biggest palladium producer in the world. Canada and South Africa are other significant players in the palladium mining industry.
Why is Palladium Getting So Expensive?
There is a growing demand for palladium, but the existing supply is insufficient to meet demand. The last 7-years have seen a net deficit and deficits are expected to continue.
Demand globally, especially from China and Europe, is consistently increasing as emission regulation are getting stricter to better control pollution.As well, the diesel emission scandal of recent years has transitioned consumer demand away from diesel powered engines to gas powered engines.
This is forcing the automobile manufacturers to increase the amount of palladium they use in the vehicle exhaust systems.
All these factors are contributing in making palladium more precious than gold and even platinum.
Also, palladium is typically made as a byproduct to nickel or platinum mining. This means its total output generally lags price gains. Being a byproduct of other mining operations also means palladium production growth is constrained by increases in production and new mine development from other commodities.There are only two primary palladium mines globally. In 2019, the amount of palladium produced is estimated to fall short of demand for the 8th straight year. This has also helped drive palladium prices to consecutive records.
What Does the Future Hold?
The sky-high prices may force car makers to find a substitute to palladium but that’s not going to happen any time soon. No existing element has been as useful in reducing toxic emissions from gas-powered vehicle exhaust systems. Substituting a new metal is highly challenging, costly and would take a significant amount of time to implement.
Also, researchers have found that a lot of major technological advances are needed before any other metal (including platinum) can match the performance of palladium.
Many argue that the popularity of electric cars may help curb the demand of palladium. It’s true that pure electric vehicles don’t use gas or exhaust pipes, so they don’t use palladium. However, both Plug-In Hybrid and pure Hybrid Electrical Vehicles use gas powered engines and therefore demand for palladium is expected to continue well into the future.Additionally, the majority of analysts believe that “electrification” of the entire global automobile industry will take decades due to the inherent infrastructure challenges and commodity supply constraints associated with 100% “electrification” of global transportation
This article contains the author's opinions. These are not investment-related recommendations. Do not consider the article as any type of commercial solicitation or an investment product offer.
About the Company
Palladium One Mining Inc. is a Platinum Group Element (“PGE”) Nickel-Copper exploration and development Company. Its assets consist of the Läntinen Koillismaa PGE-Nickel-Copper Project, located in north-central Finland and the Tyko Nickel-Copper, PGE Property near Marathon, Ontario, Canada.
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