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Market structure
Processing operations
Palladium market fundamentals are particularly tight since supply is extremely limited. Sources of palladium production are quite scarce. In fact, more than 90% of world palladium production is concentrated in just two countries: the Russian Federation and South Africa. The Russian Federation alone accounts for more than two thirds of total palladium supply, what puts this country in a position of price maker.
There are three sources of palladium from Russia: the Norilsk Nickel mine, Gokhran (Russia's precious metals and gems reserve) and the Russian Central Bank. The state-owned trading monopoly, Almazyuvelirexport, handles palladium shipments from Russia.
The Norilsk-Talnakh region in the Russian Federation is the main producer area, with the company NORILSK NICKEL as the world palladium industry leader. However, the palladium mined by this company has been far from meeting the tremendously growing world demand. This deficit has been filled from state stockpiles.
The Norilsk-Talnakh mines reached their highest level of production in the late eighties. However, at the beginning of the nineties output fell mainly due to low level of investment as well as to lower productive capacity. PGMs grades were also lower due to the mining out of massive sulphide ores. As a result of higher palladium prices in the late nineties, Norilsk Nickel is investing in order to improve PGM recoveries, leading to increases in refined PGM production.
The Russian Federation is also the only country which has held significant stockpiles of palladium, although it is believed that their level has decreased considerably. The actual level of Russian palladium stockpiles is a state secret. Russian Government export policies have significantly influenced world palladium supply and prices volatility.
The other significant producing area is the Bushveld Complex in South Africa, where Platinum Group Metals are mined as primary products. Palladium is also mined in smaller deposits in United States and Canada. Mining companies in South Africa and North America are developing expansion plans which will lead to future increases in palladium production.
Platinum Group Metals mining industry is capital intensive. Companies need large investment to build production facilities and long-term survival requires heavy expenditures in order to finance exploration and production. Processing of the ore through milling, flotation and smelting to form a matte that contains the PGM is normally undertaken at the mines. Further refining may take place in refineries on the mine property or in other countries.
New palladium mine developments and exploration outside the Russian Federation, particularly in North America, are taking place as a result of the palladium market boom. This is a response to the erratic Russian supplies and consequent higher palladium prices. There is a need to diversify away from the heavy dependence on Russian palladium. Moreover, at the current prices it is highly profitable to find and mine palladium.
Platinum Group Metals mining and production entails extreme difficulties. Extraction, concentration, refining and separation of the metals require quite complex processes that may take up to six months. Sometimes extraction of the precious metals as platinum and palladium is the main focus of a particular industrial operation while in other cases it is a by-product.
In the major palladium producer country, the Russian Federation, palladium is mined as a by-product of nickel and copper. Concentration, smelting and base metal refining are carried out in facilities at the Norilsk-Talnakh complex. The Norilsk Nickel Combine Smelter of the Kola Peninsula receives a proportion of the high grade nickel ore while PGM slimes are sent to specialist precious metal refineries in order to obtain the pure metals.
Extraction
Usually PGMs mining is underground although there is some open-pit mining. The extraction stage is labour-intensive. Miners bore holes with hand-held pneumatic drills and blast them with explosives. Afterwards, ore is removed and transported to the surface. Normally, mill-head grades of BIC (the measure for the PGM content for the ore) are between 4 and 7 grams per tone.
Once in the surface, ore is crushed and milled in order to obtain smaller rock particles and to expose the minerals which contain the PGM. In a "froth flotation" process these particles are mixed with water and special reagents, before air is pumped through the liquid. As a result bubbles to which the PGM-containing particles adhere are created and they float to the surface. This flotation concentrate is removed as a soapy froth. The PGM content, at this stage, varies between 100 and 1000 grams per tonne. In order to obtain the maximum amount of PGM, the material, which fails to float, goes through a second milling and flotation process.
Concentration
The flotation concentrate, once dried, is smelted in an electric furnace at temperatures that may be over 1500o C. Then, a matte which contains the valuable metals is separated from the unwanted minerals that are discarded. After being periodically tapped, air is blown through this matte in the converters with the purpose of removing iron and sulfur. Now the "converter matte" PGM content is higher than 1400 grams per ton.
Refining
At a base metals refinery, nickel, copper and cobalt are separated from the PGM using standard electrolytic techniques. Residues in which PGMs are concentrated are obtained. The last stage of palladium production requires the separation and purification of the platinum group metals, apart from gold and small amounts of silver. This is the most difficult and intricate part of the process, combining solvent extraction, distillation and ion-exchange techniques. Finally, the soluble metals, which dissolve in hydrochloric acid and chlorine gas, are obtained: first gold and then palladium and platinum. The insoluble PGM are the last to be extracted.
Recycling
Palladium is recovered from a diversity of post-consumer scrap. There is not a universally applicable technique for this recycling and it usually depends on the proportion of metal in the scrap. The largest part of this recycling comes from the autocatalyst sector. Normally, in order to fuse the catalyst substrate and dissolve the PGM, it is melted at a very high temperature with iron or copper. The obtained alloy is leached to dissolve the copper or iron, extracting a PGM concentrate which is refined in a process similar to that described above.
