Are PGMs Imperative for our National Security?

Securing our national defense capabilities through PGMs

The United States Geological Survey (USGS) released a new list of 50 mineral commodities critical to the U.S. economy and national security after an extensive multi-agency assessment that included platinum metal group metals. Soon after, the Biden Administration released a memorandum announcing that electrolyzers, fuel cells, and platinum group metals (PGMs) are industrial resources, materials, or critical technology items essential to national defense. 

“Ensuring a robust, resilient, and sustainable domestic industrial base to meet the requirements of the clean energy economy is essential to our national security, a resilient energy sector, and the preservation of domestic critical infrastructure.”

The administration has sought the expansion of the domestic production capability for electrolyzers, fuel cells, and platinum group metals necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.  Requirements of section 303(a)(1)–(a)(6) of the Act for the purpose of expanding the domestic production capability for electrolyzers, fuel cells, and platinum group metals have been waived. 

As global production and supply chains continue to be disrupted due to COVID and Russia’s invasion of Ukraine, supply and demand of platinum fell sharply during the first quarter of 2022. The platinum market was recently upheaved by geopolitical and supply-chain disruptions causing a 13% decline during the first quarter of 2022 to 1.28 million ounces compared with the 1.46 million ounces a year prior. 

Russia accounts for around 25-30% of the world's supply of palladium and around 8-10% of its platinum. Russian sanctions and its decrease in production of palladium and platinum are putting additional pressure on the global PGM supply-chain

The administration is expecting mining supply challenges to continue this year. Three major South African producers all lowered production guidance, compounded by Covid-19 labor shortages and two major producers in the region performing maintenance on key refining assets. WPIC Director of Research Trevor Raymond said on a call “the surplus of 627,000 ounces [of platinum] does look like it is quite easy to go from surplus to a deficit this year.” Global supply of the critical minerals seems to be trending down and expands the United States governments need to ensure PGMs supply chain resiliency for national security, the domestic economy and critical domestic infrastructure.