An Overview of the Catalytic Converter Recycling Industry
With the rise of automobile production came the increase of pollutants in our air, and as a result, the catalytic converter was invented. As a device that transforms harmful gasses into less toxic emissions, converters became staple devices in all cars by the 1970s. That means that the converter recycling industry has been around for roughly 50 years, and we’re here to give you all the details. Check out our video or keep reading to get informed.
What Is A Catalytic Converter?
A converter is an emission control device installed on gasoline, diesel, and hydrogen vehicles to reduce harmful pollutants. It works through a process called oxidation and transforms carbon monoxide, hydrocarbons, and nitrogen oxides into carbon dioxide, nitrogen, oxygen, and water vapor. This process can only be achieved with a catalyst made of platinum, palladium, and rhodium.
Historically, vehicles had one large converter, but as technology progressed, manufacturers exchanged the large unit for multiple smaller ones. This meant that there were lower average recoverable ounces of platinum, palladium, and rhodium. Today, carmakers install one or multiple converters on a vehicle.
Oxygen sensors are an additional component of the catalytic converter that also contain precious metals. They are used as an indicator to ensure the converter is functioning effectively. There are typically anywhere between 2 – 4 oxygen sensors on a converter and are located both upstream and downstream of the unit.
Why are Converters Valuable?
As we’ve mentioned above, the inside of a converter is made with platinum, palladium, and rhodium. These precious metals are essential to the global supply chain, and they play key roles in the production of jewelry, electronics, glass, pharmaceuticals, green energy, and more.
The demand for these metals has risen steadily over the decades, which means the market value has also increased. With the green transition, hydrogen fuel cells, solar power, and more ecologically friendly solutions emerging, the demand for these metals will just skyrocket.
While converters are valuable because of the precious metals they contain, it’s important to note that not all converters contain the same amount of metals. Let’s get into it.
Factors That Affect Metal Content in Converters
Factors that will impact a converter’s precious metal concentration include country emission policies, a vehicle’s wear and tear, and converter dismantling. That’s why every converter has a different value once it enters the recycling stream.
Country Emission Policies
The stricter the emission policies in a country or state, the higher the required metal loadings in a converter. For example, California has the strictest emission policies, which means all vehicles sold in California must have converters with higher precious metal loadings.
It’s important to note here that emission laws are changing and getting stricter and stricter. More than 16 other American states have adopted the California emission standards. The remaining states follow the EPA’s Tier 3 rules, implemented in 2017. This means that as emission standards get stricter and states adopt more unified standards, we’ll be seeing less discrepancies in the metal content loaded in converters during manufacturing. But since the average lifespan of a vehicle is around 12 years, we will only start to see these changes in precious metal loadings in 2030.
Vehicle Wear and Tear
The precious metal loadings of a converter will be affected by general vehicle treatment. The first factor that affects a converter’s ceramic is a lack of maintenance, which could affect the precious metal loadings. That’s why regular check-ups and vehicle care is strongly encouraged.
High mileage results in lower metal content and accidented vehicles tend to have decreased precious metal loadings. If a converter was cut, hit, or disturbed in any way, this can also result in lower metal content.
When a converter is dismantled, if it’s torn, ripped, or improperly removed from the vehicle, this can result in ceramic loss and decrease the metal content in the converter. That’s why it’s important for vehicle dismantlers and recyclers to use proper dismantling methods.
These factors bring us to the beginning of the recycling process: acquisition. Where do scrap converters come from and how can you buy them?
For automotive recyclers, converters are a bi-product of their end-of-life vehicle purchases, which can be an added revenue stream. On the other hand, scrap metal recyclers buy individual units at their scale and resell them to other buyers or to a processor. A business can collect converters using both these methods.
Recyclers either sell to other buyers for a per unit price or deal directly with a company that can offer payment based on ceramic weight and precious metal loadings at current market price, like a toll-refiner.
Purchasing converters on a per unit basis means evaluating them by grading categories and/or serial numbers. It’s important to remember that both methods can differ according to a buyer because buyers don’t share the same pricing information and don’t always have access to accurate evaluation tools.
What to Lookout for When Evaluating Converters by Serial Numbers
While evaluating a converter by serial number cuts close to its true value, there are two factors to consider. First, if a buyer doesn’t have reliable and accurate pricing information, recyclers won’t be getting a fair price. It’s crucial to evaluate if a buyer/seller has the right pricing data.
Second, converters are old and dirty, which means corrosion will affect the visibility of serial numbers. The only way for recyclers to unlock their material’s true value is to sell directly to a toll-refiner, which brings us to converter processing.
Catalytic Converter Processing
Once the converters have been sold to a toll-refiner, the units undergo multiple stages of processing. The converters are decanned, crushed, commingled, sampled, and then sent for laboratory analysis. Recyclers are paid based on that laboratory analysis, which determines the amount of each precious metal found in their converters. Let’s get into it.
The Most Important Step: Assay
Historically, recyclers had to send a minimum of 2000 lbs of ceramic to work with a company that provided payment based on laboratory analysis. Today, PMR has developed specialized machinery that allows suppliers producing a minimum of 200 lbs of ceramic to deal directly with us.
Once the converters have been crushed and commingled, they get sampled and sent to a lab for an assay analysis. Toll-refiners use two primary technologies to evaluate catalyst material, which are X-ray Fluorescence (XRF) benchtop and Inductive Coupled Plasma (ICP) devices. These machines will determine the concentration of platinum, palladium, and rhodium in a recycler’s entire load.
Once the analysis is complete, recyclers receive their troy ounce recovery figures, which helps them hedge market prices for platinum, palladium, and rhodium. That’s how they can request payment and be confident that they’re getting their material’s true value.
While this is the end of the line for recyclers, their converters still have a long way to go before they re-enter the global supply chain.
What Happens After the Toll-Refiner?
Once the laboratory analysis is complete, the ounces move to the smelting stage, which involves an arc-furnace that heats and melts the ceramic. This is where the extraction process begins.
The metals that are separated from the ceramic are again reduced to undergo chemical leaching and separation to further concentrate the material into a metal sponge or its pure elemental state. It’s at this point that the metals are considered physical ounces available for purchase, sale, and trade.
The sponge can be sold back into the metal market or can undergo further heat treatments, where the sponge is melted to produce pure metal bullion bars. The physical metal bars are stored and shipped to and from bullion vaults, otherwise known as depositories. Once the metal sponges and bullion bars are resold, that’s when platinum, palladium, and rhodium are returned to the global supply chain.
But this wouldn’t be a complete converter recycling overview without explaining how the precious metal market comes into play.
The Precious Metal Market and How It Affects Converter Value
As we’ve mentioned before, the value of a converter depends on the market prices of platinum, palladium, and rhodium. However, the market changes all the time, which can feel a little confusing. We’re here to explain how the market changes and why it affects the value of catalyst material.
Platinum & Palladium
As platinum and palladium are traded daily on the open market, there are multiple purchasers of these metals. End buyers for these come from various industries, including vehicle production, medical and pharmaceutical fields, clean energy production, and more.
That means that prices fluctuate according to supply, demand, and speculation. While they are crucial for catalytic converter manufacturing, they have a wide range of end uses including medical tools and applications, electrical manufacturing, and jewelry. Prices for these two metals vary every minute.
Rhodium is the hardest to mine, which means it’s only bought and sold for industrial commercial uses to reduce greenhouse gas emissions and fossil fuel burning. Around 80% of recycled rhodium goes back into the production of converters, which means end buyers for rhodium are mostly large car manufacturing companies. It’s for this reason that rhodium isn’t a commodity speculated on the open market. Rhodium’s market price changes every 24 hours.
While you may think that converters have a fixed price, their value changes all the time. As we’ve seen, it’s because the market for the precious metal they contain varies every minute and every day.
PMR: A Pioneer in the Converter Processing Industry
As a converter processor who saw its beginnings in 1996, we’ve been helping recyclers unlock their material’s true value for more than a quarter of a century. When recyclers choose PMR, they choose consultative and advisory support throughout their entire processing journey. That means from purchasing converters all the way through to the final sale of their metals, they’ve got an ally in their corner.
We’ve developed innovative processing systems and redefined the toll-refining process through cutting-edge machinery and top-tier processes. We’ve launched user-friendly pricing and referencing tools, such as photo grading and VIN/TRIM. Our suppliers have access to tracking and inventory tools through their exclusive Supplier Services Platform (SSP). That’s because we believe that informed recyclers are empowered to make the best choices for their businesses.
For more information, visit PMR’s Resource Center.