Not So Precious Anymore

General Motors Corp. is fed up. And so are other automakers with the high cost and unpredictable supply of palladium, used in catalytic converters to cut emissions.

As a result, the major players in the auto industry are taking steps to significantly reduce use of the precious metal — a critical element during the past decade or so to making cars and trucks run significantly cleaner.

GM, quite possibly the world's largest consumer of palladium, is aiming to reduce its use by 40% to 60% during the next three to four years. As much as half of that reduction might be attained this year, adds a company spokesman. “We're trying to reduce our dependence on palladium,” the spokesman says. “We want stable supplies at predictable costs.”

Other automakers aren't sitting still, either. Honda Motor Co. Ltd. owns 10% of Catalytic Solutions Inc., an Oxnard, CA-based company that is developing an ultra-low palladium catalyst. GM and Ford Motor Co. are rumored to be considering Catalytic Solutions' technology. Nissan Motor Co. Ltd. also is saying it wants to achieve better catalyst results with far less palladium.

In an effort to meet tightening regulations for tailpipe emissions, automakers began loading up catalytic converters with palladium in the early 1990s because it was relatively affordable, and it considerably enhanced emission control performance.

But palladium has risen from $120 an ounce in 1997 to all-time highs of more than $1,000 an ounce earlier in January. Prices have gone down since then — to around $660 an ounce in early May — but that's apparently still too expensive for automakers.

Besides the price, supply is erratic. Russia mines about 70% of the world's annual palladium output. In the past several years Russia has left industries guessing about the timing and size of palladium shipments by holding up export quotas and licenses in bureaucratic processes. For example, without any warning Russia halted palladium shipments in early December last year for the remainder of 2000 claiming domestic producers had used up all the available export licenses. Russia also keeps a tight lid on the quantity of its palladium deposits; no one knows for sure how much is left.

As a result, automakers have decided to go on a diet. The auto industry is the largest user of palladium. It consumes about 160 of the 250 tons produced each year.

GM is cutting back on palladium mainly via engine calibration and other systems engineering solutions, such as locating the catalytic converter closer to the exhaust manifold so it warms up faster and reduces cold start time, which is when a catalytic converter is least effective. Also enabling GM's rather quick palladium reduction pace are the cleaner fuel standards set to kick in for 2003 that will reduce the amount of sulfur in gas. “That basically means there will be less junk to catalyze,” explains the GM spokesman.

Beyond its own efforts and cleaner fuel, GM is considering technology developed by Catalytic Solutions. Keeping the details of its technology proprietary, Catalytic Solutions claims it can achieve better catalyst performance by combining very small amounts of palladium with oxides, such as lanthanum, that are widely available, cheap and environmentally friendly.

Depending on the vehicle application and catalyst demands, different combinations of palladium and oxides are needed, explains Catalytic Solutions Chief Executive Bill Anderson. Heating and treatment of palladium and oxides also vary accordingly. Mr. Anderson says Catalytic Solutions is seeing a 50% to 70% reduction of palladium in work with Honda.

OEM development cost savings — separate from material cost savings — are estimted at $40 to $50 per vehicle with a 2L 4-cyl. engine and $350 to $500 for a high-performance sedan. Not only are automakers spending less on the precious metal for each vehicle, they're also depleting inventories slower. That makes it easier for vehicle manufacturers to ride out wild price fluctuations.

With the anticipated cost savings and stricter emission regulations due to kick in during the 2004-'07 timeframe, it's easy to see why Catalytic Solutions, Degussa Metals Catalysts Cerdec Corp. and other companies offering similar solutions are attracting increasing attention from automakers, especially from those with more pressing cost concerns. “General Motors has been very aggressive in what we'll call the thrifting of precious metals,” reveals Mr. Anderson.

Somewhat surprisingly, Catalytic Solutions' fortunes are not tied to the lifespan of gasoline and the internal combustion engine. The company is developing catalytic coatings for alternative fuels and plans to have product offerings for diesel engines. “We're certainly ready to pursue that direction,” Mr. Anderson says.

As for fuel cells, current technology requires twice as much precious metal as typical catalysts. Reducing the use of costly precious metal will help make fuel cells commercially viable sooner.