When John Sheridan decided back in February 2006 to stay on as the permanent chief executive of Ballard Power, who would have guessed that one of his biggest concerns would end up being the price of platinum? Back then, platinum was just a bit over $1,000 (U.S.) per ounce. By mid-2007 it had jumped to $1,300 per ounce. Then it really got bad, soaring to more than $2,300 an ounce in the 12 months that followed.

It’s not an insignificant problem for fuel-cell makers, which rely on platinum as a catalyst. In fact, Sheridan says depending on the size of the fuel cell platinum typically costs 8 per cent to 25 per cent of the total cost of the product. “It was a big, big worry in my first years in the company,” he told me in a recent interview.

Well, we know what happened in the second half of 2008. The markets went in the toilet. But platinum prices were hit particularly hard, influenced by the downturn in the auto sector. The auto industry is a big purchaser of platinum group metals, which are a key material in catalytic converters used to control tailpipe emissions. As a result of weakness in the auto market, platinum prices since March have plunged more than 60 per cent to the $830 to $850 range. In fact, last week gold prices surpassed platinum prices for the first time in 12 years.

Platinum prices have fallen so fast that platinum producers such as South Africa, which controls about 80 per cent of the global market, have moved to restrict supply to shore up prices. Hmmm… taking a page from the OPEC playbook it seems.

Ironically, the auto sector was once Ballard Power’s biggest customer and shareholder. But now, with the company focused on back-up power and industrial mobility (i.e. forklifts), the Vancouver-based fuel-cell developer is benefitting from the auto sector’s woes. Sheridan said the company, since the plunge in prices, has purchased a large amount of platinum supply and locked in at the dramatically lower prices. This should help the company over the next year or two as it gets into higher volume production.

UPDATE: It was reported yesterday that Chinese engineers have come up with a way to use nickel as a catalyst in fuel cells instead of platinum, but many years of work would be needed to even determine if such a catalyst could truly replace platinum. More details at MIT Technology Review.

Tags: Ballard Power, catalytic converters, platinum

This entry was posted on Monday, December 15th, 2008 at 1:07 pm and is filed under fuel cells. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.