Recycling of spent
automotive catalysts

Segment description

1. COLLECTED AND PROCESSED MATERIALS

An automotive catalyst is a part of the exhaust system that reduces the amount of harmful substances contained in the exhaust fumes. There are two types of catalysts:

Ceramic catalysts
In simple terms, they consist of a stainless steel housing and a ceramic insert whose surface was sprayed with metals from the platinum group metals (PGM). 

Metal catalysts
Constructed of a metal block made of layers of corrugated foil, forming a channel network, which, like in the case of a ceramic catalyst insert, contains PGM.

  

Platinum group metals, mainly platinum, palladium and rhodium, stimulate carbon monoxides, hydrocarbons and nitrogen oxides contained in the exhaust fumes to react, which results in reduced emissions of harmful compounds. The content of PGM in automotive catalyst inserts on average varies between 0.2-0.3%, this level depends on the age of a car and the type of fuel burned. Catalyst recycling processes are aimed at recovering precious metals for reuse. Recycling of automotive catalysts enables recovery of up to 95% of platinum content, it also saves significant amounts of energy as compared to traditional mining (processing of 1 ton of spent catalysts prevents the extraction of 150 tons of ore or alternatively 400 tons of waste rock).


Source: platinum.matthey.com

 

2. BUSINESS MODEL

SAC processing chain

 

Process

When ceramic catalysts are delivered to Elemental Holding plants, casing is removed, sorted according to PGM content, and their ceramic inserts go to ball mills, in which they are ground. The resulting material is then subjected to chemical analysis to check the PGM content. Then it is in big bags weighing 1 ton and transported to contractors (metallurgical and steelwork concerns) in containers transporting 20-40 tons.

SAC processing stages

 

3. DESCRIPTION OF THE MARKET ON WHICH THE GROUP OPERATES

Automotive catalysts recycling market
Over 400 tons of PGM (Platinum Group Metals) are mined each year worldwide, including platinum, palladium or rhodium, as well as iridium and ruthenium. It is predicted that in 2018p platinum production will be 188 tons, palladium 214 tons, and 24 tons of rhodium. Global PGM resources are estimated at 66 thousand tons, of which 95% are located in South Africa. An increasing amount of PGM is recovered in the recycling process of automotive catalysts and jewelry. In 2018p, 63 tons of platinum, 96 tons of palladium and 10 tons of rhodium will be reused.

PGM production

%


Source: PGM Market Report, Vestor DM

PGM recycling

%


Source: PGM Market Report, Vestor DM

South Africa is the largest producer of PGM, which provides 73% of the world production of platinum, 39% of palladium and 82% of rhodium. Also Russia is a significant producer of palladium, which accounts for approximately 41% of the world's production of this raw material. A significant amount of used PGM comes from recycling, inter alia, of automotive catalysts (68% of platinum, 84% of palladium and 100% of rhodium), electrical equipment (2% of platinum, 16% of palladium), jewelry (30% of platinum, 1% of palladium). It should be emphasized that mining of platinum group metals is much more expensive than obtaining them through recycling, as the content of platinum in one ton of ore is 2-6 g, while in one ton of catalysts there is approx. 2 kg of platinum group metals.

PGM producers

%



Source:
PGM Market Report, Vestor DM

PGM recycling

%




Source:
PGM Market Report, Vestor DM

The greatest demand for PGM (platinum, palladium, rhodium) is generated by the automotive industry, in which they are used in catalytic converters (catalysts). Vehicle production generates about 65% of the total demand for PGM metals.

Sektory wykorzystania PGM

PGM DEMAND (TONS) 2018 2018
Chemical industry 31,5
Electronic industry 31
Glass industry 12,4
Medical industry 6,3
Oil industry 5,7
Jewelry 68,7
Catalysts 357,5
Investments 17,5
Other 18,6
TOTAL 549,2

 

Forecast sales of vehicles in the world in 2018-2024

 

EVOLUTION OF VEHICLES ACCORDING TO THEIR POWER SUPPLY

A factor that can significantly affect the demand for PGM is a new generation of vehicles using electric motors. It should be noted that hybrid vehicles (HEV) will also be equipped with catalysts using platinum, palladium and rhodium due to the use of an internal combustion engine. Only BEV vehicles using nothing but electricity will not require a catalyst.

WORLDWIDE STOCK OF ELECTRIC CARS
IN 2013-2017 (STOCK CUMULATIVELY IN MILLIONS)

A factor that will affect an increase in demand for PGM in the coming years is the increasingly restrictive emission standards. Car manufacturers wanting to meet the requirements will be forced to introduce more and more advanced structural solutions, which may result in an increased demand for PGM.

Activities of the companies from the Elemental Holding capital group in the SAC segment are based primarily on the consolidation of the network collecting catalysts. Entities do not buy individual items but they cooperate with manufacturers, car service stations and showrooms, wholesalers and retailers, dismantling plants, as well as muffler shops. The Management Board estimates production capacity of the companies from the SAC segment at approx. 15 thousand tons per year.

Due to organic growth and acquisitions of entities operating in the SAC segment, Elemental Holding increased the volume of processed catalysts from 87 tons in 2016 to 1,300 tons in 2017, and the total volume in 2018 is estimated at 2,500 tons. This volume is constantly growing and the company estimates that in 2019 it will not be less than 3,000 tons.

 

FORECAST SHARE OF ELECTRIC CARS IN THE WORLD’S AUTOMOTIVE MARKET


SAC VOLUMES OF THE EH GROUP

In addition, the company significantly increased revenues of the acquired entities. After the acquisition, PGM Group's revenues increased from PLN 58 million in the period from 09.2015-08.2016 to PLN 162 million in the period from 09.2016-12.2017. In the case of Platinum M.M., it was possible to increase revenues from the level of PLN 22 million in 2016 to PLN 62 million in 2017.

 

Revenues of PGM Group and Platinium in 2016-2017

PLNm



Source: the Company, Vestor DM
*PGM Group 2016 – data for the period 09.2015-08.2016 and 2017 – data for the period 09.2016-12.2017

EBITDA of PGM Group and Platinium in 2016-2017

PLNm





Source: the Company, Vestor DM
*PGM Group 2016 – data for the period 09.2015-08.2016 and 2017 – data for the period 09.2016-12.2017

According to the estimates of the Management Board, the share of companies from the ELEMENTAL Group on the global market of catalyst recycling amounts to approx. 5% and places it in the group of market leaders. The Group's major competitors are the German companies Hensel Recycling and Mairec Edelmetallgesellschaft and the Italian Chimet S.p.A. Additional competition in this segment are steelworks and refineries which independently purchase catalysts.

4. BUSINESS UNITS OF THE SEGMENT

The Elemental Holding group companies operating in the SAC segment are:

  • Platinium MM (Wysogotowo near Poznań) – a Polish company specializing in the recycling of spent automotive catalysts and DPF filters as well as other wastes containing precious metals.
  • PGM Group (Grodzisk Mazowiecki) – a Polish company that operates dynamically on the market of acquisition and processing of waste containing precious metals and lead. It is run by a young management team with extensive experience.
  • Elemental Resource Management (UK) – a company operating on the British market since 2009. Based on innovative IT tools and purchasing models, it carries out collection, transport and processing of spent automotive catalysts.
  • EMP Recycling (Lithuania) –aleader of the Lithuanian market in the treatment of waste electrical and electronic equipment and automotive catalysts. It has a refrigerator processing plant, production lines for the processing of catalysts, cables and used electronics, and a laboratory for sample analysis.
  • Recat (Germany) – is strategically located in the south-west of Germany, it has a purchasing network in Germany, Austria, Switzerland, France and in countries of the North-West Africa. The company has permission to dispose of spent catalyst waste (including that containing dangerous substances) as part of their collection, transport, storage and processing. RECAT has the ability to test the exact content of precious metals using modern methods (ICP) in its laboratory. Within the framework of its operations, the Company also conducts research projects in the field of recycling and transport of waste batteries and accumulators, including lithium-ion batteries. Among the RECAT managing and cooperating staff, there are people with academic titles and rare qualifications in the field of recycling.
  • Evciler (Europe, Middle and Far East) – coordinates the Group's operations in the Middle East, Asian and African markets, where sales representations are currently located. The company operates in the Special Economic Zone in Dubai.
  • Kat-Metal (Finland) – a company operating since 2011 that is currently a leader of the Finnish recycling market of electronics, automotive catalysts and batteries. It handles waste collection, transport and processing in a responsible way, compliant with the highest standards and safe. The company cooperates with entities directly involved in purchase and collection of waste, and also provides comprehensive services for the industrial sector. It is a member of local organizations dealing with recycling, sales of scrap metal and car dismantling, it actively supports and implements the concept of the so-called urban mining, namely recovery of materials from unused infrastructure and equipment..

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