A Platinum Age?

Automaking is such an all-pervasive industry that fortunes can be made and lost on the winks of Detroit's Big Three. Lately there has been considerable speculation on just how seductively they are winking at the precious and relatively obscure metal platinum. On the one hand, platinum is the leading candidate to serve as the active agent in an anti-pollution device that will probably have to be installed on all new cars beginning in 1975. But hundreds of scientists are trying to find another, cheaper substance that will do the same job. If they succeed, the platinum market will probably remain fairly stable. But if automakers actually start using platinum, all bets are off. Their demand for the metal each year would be roughly equal to the amount now produced annually by the entire world.

Catalyst. Chemically, platinum is capable of changing certain noxious gases, including smog-producing hydrocarbons, into harmless carbon dioxide and water vapor. A platinum-coated honeycombed structure called a catalytic converter has so far performed best in meeting the tough federal emissions standards for '75 and '76 model cars. According to top auto executives, the amount of platinum needed for each car is one-tenth of an ounce. Thus, with total U.S. new-car sales expected to top 10 million units annually for the foreseeable future, manufacturers will need more than a million ounces of platinum a year. At present, world production of platinum is about 1.2 million ounces annually, most of it for use in petroleum, chemical and electrical industries.

At the going price for platinum sold by producers (about $120 per oz.), each new car sold with a platinum converter would contain about $12 worth of the substance. There also are geopolitical problems: the bulk of known platinum reserves lies in South Africa and the Soviet Union. Says Lester Krellenstein, a metals expert at the Manhattan brokerage house of Bache & Co.: "G.M. alone is experimenting with about 600 compounds to find another way to meet the emission standards."

Sudden Surge. At the same time, all three companies are showing an unmistakable interest in the world platinum supply. Ford has reached an agreement with Manhattan's Engelhard Minerals & Chemicals Corp. under which Engelhard will supply "not less than 60% " of the platinum-treated converters that Ford may need in 1975, 1976 and 1977 models. Engelhard has close ties with South Africa's Rustenburg Platinum Mines, the world's largest. G.M. executives are known to have discussed platinum purchases with other South African producers, and Ford, G.M. and Chrysler have all consulted with the U.S. Commerce Department about possible deals to buy Soviet platinum.

Last month platinum futures reached historic highs in the commodities market, putting purchases scheduled for this fall at $161 per oz. Then a Bell Laboratories report suggesting that nonplatinum catalysts are close at hand pushed prices down. Bell's research was hotly disputed by Engelhard, and the market has lately been gyrating from day to day; last week's closing price was $151. Until it has been decided in the labs, probably by the end of this year, plenty of speculators are betting that the golden age of platinum is not far away.

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