For decades, hydrogen has been seen as a green energy alternative to fossil fuels. With strong government support and increasing investments, the hydrogen economy is finally approaching its golden era. However, the future of the hydrogen economy cannot be unlocked without a critical precious metal: platinum.
The hydrogen economy is still in its infancy. Although hydrogen has long been used in industrial processes, its adoption as a widely used energy source is just beginning. Japan, South Korea, and Germany are leading the way, making significant investments in hydrogen infrastructure and technology. Energy giants like Shell, BP, and Total have invested billions in hydrogen projects, while car manufacturers such as Toyota, Hyundai, and BMW are betting big on the development of fuel cell vehicles.
Besides emission reductions and environmental benefits, the hydrogen economy’s potential includes creating new industries and job opportunities, reducing dependence on imported fossil fuels, thus strengthening energy security.
In December 2023, Michael Rowley, President and CEO of Stillwater Critical Minerals Corp. (TSX.V: PGE, OTCQB: PGEZF), discussed the future of critical mineral supply in an interview with METALS 100. He revealed that the company had secured strategic investment from Glencore. Their flagship project, Stillwater West Ni-PGE-Cu-Co + Au, has an expanded NI 43-101 mineral resource estimate as of January 2023, indicating deposits of 1.6 billion pounds of nickel, copper, and cobalt, and 3.8 million ounces of palladium, platinum, rhodium, and gold.
According to the World Platinum Investment Council (WPIC), by 2030, the demand for platinum related to hydrogen applications will account for approximately 20% of total platinum demand, with hydrogen fuel cell vehicles making up the majority of this demand. By 2040, hydrogen-related platinum demand could become the largest demand sector for platinum. The demand for hydrogen-related platinum mainly comes from two areas: electrolyzers for hydrogen production and hydrogen fuel cells for power generation. By 2030, electrolyzers will account for 20% to 25% of hydrogen-related platinum demand, while hydrogen fuel cell applications will support most of the increase in platinum demand.
The emergence of a new end-use for a commodity is relatively rare, thus the rise of the hydrogen economy will strengthen the investment logic for platinum, especially given the current supply shortage in the market. Between 2025 and 2028, the platinum market gap is expected to reach about 430,000 ounces (about 5% of demand), which will reduce above-ground inventories and support higher prices.
From an investment perspective, platinum prices are still at historical lows, far below those of gold and palladium.
