High-tech can’t last: Platinum Group Metals

Like the Rare Earth Minerals, these too are finite and subject to supply chain failure.


22 September 2000. Russia Tightens Its Grip on Key Mineral Resources. Stratfor.com

The Russian Finance Ministry has assumed control of the country’s precious metals and gems…including over 80 percent of the world’s palladium reserves – and that will give the ministry greater leverage over Western governments and multilateral lending institutions. Russia provides 20 percent of world platinum supplies but the near-monopolistic control it holds over palladium is exceptional.

This transfer of authority should be raising alarms in Western business circles. Russia stockpiles palladium as other countries used to stockpile gold – but since it controls so much of the global supply, Moscow can easily manipulate the market to its advantage, and has done so in the past. In early August, for example, palladium prices hit a record $859 an ounce after fears of a delay in promised Russian deliveries to Japan.

In addition, the Russian palladium industry is tightly controlled by the state: All sales must be approved by presidential decree, and all information on production, stocks or exports is deemed classified.

In the same reorganization, the Finance Ministry also assumed control over the country’s platinum and diamond industries.

Palladium is crucial to modern economies, with a range of uses that dwarfs the importance of the jewelry market. Palladium’s high conductivity makes it a material of choice in a wide array of high- technology goods such as cellular phones and laptop computers, but what makes it truly valuable is its effectiveness as a chemical catalyst.

Palladium has replaced platinum as the preferred catalyst in catalytic converters, which reduce motor vehicles’ output of pollutants.

Palladium is also the primary catalyst used in fuel cells, a new technology that could revolutionize the electric power industry over the next few years. Fuel cells are a type of portable, environmentally-clean power generator similar to a reusable high- voltage battery. They can be installed in homes, businesses or cars – making their users largely independent from the petroleum market – and should enter the mass market in 2003.

As a result of its increasing practical value, global demand for palladium in 1999 more than doubled from 1998 with no corresponding increase in supply, causing stockpiles to be sold down to bare-bones levels. Now, most of the world’s most valuable metal is under the thumb of Russia’s Finance Minister, Mikhail Kasyanov. The question is: What will he do with his added influence?

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