By Miho Yoshikawa
TOKYO, May 27 (Reuters) - Mitsui Mining and Smelting Co Ltd aims to start commercial production of its new, less costly catalyst -- which applies silver rather than platinum -- in 2011/12, a company official said on Tuesday.
The use of silver instead of the more expensive platinum, currently trading near a historical high, will enable the company to cut metals costs by more than 90 percent.
Kentaro Kato, a senior official in the company's sales department, said cutting costs was the primary aim of the development project, which began about five years ago.
"We focused on how we could cut costs, because we had heard that high platinum prices were giving manufacturers a really hard time," Kato said in an interview.
After testing several metals, Mitsui Mining decided that silver showed the most promise, being much cheaper and yet having comparable ability to remove soot from diesel exhausts.
"At a rough calculation, sales cost will probably be reduced by about 50 percent," Kato said.
He said the company plans to begin commercial production of the new catalyst in time for application in diesel engines for construction machinery and other industrial equipment that will need to meet stricter emission standards from 2012.
The new standards will be introduced in Japan, North America and Europe.
Tighter diesel emissions standards have already been introduced for trucks, buses and passenger vehicles.
Mitsui Mining will aim for first-year sales of 9 billion yen ($87 million).
The new technology to make a silver-based catalyst will be used for diesel particulate filters (DPFs).
It hopes to sell DPFs in a set with oxidation catalysts, which will continue to be platinum-based.
It estimates the domestic market for DPFs and oxidation catalysts at about 50 billion yen.
Kato said the company plans to supply the new catalysts to Japanese engine manufacturers, and is currently in talks with several top companies, although he declined to elaborate.
The company plans to invest in a new production line, but the cost would depend on talks with engine makers, he said.
He could not say how much silver would be needed for each catalyst as it depended on each model, which would be designed for each type of engine. "It's not possible to generalise."
RECORD-HIGH PLATINUM
Development of the new catalyst could have wide implications for the auto industry, which is struggling under additional cost pressures due to higher metals prices not only for platinum but also other metals such as steel and aluminium.
The major industrial use of platinum, which is also used in jewellery, is in catalysts, particularly for diesel vehicles.
Platinum's cheaper sister metal palladium is also used to filter out carbon monoxide and particulate emissions, and is particularly effective as a catalyst for gasoline engines.
Johnson Matthey, the world's top platinum refiner and distributor, said in report issued in mid-May that the metal could spike to a record high of $2,500 an ounce this year.
Platinum has already jumped 50 percent from the beginning of the year to hit a record high of $2,290 on March 4.
Silver is currently trading at around $18.20 per ounce.
Mitsui Mining, which has received numerous queries from overseas, is also considering the possibility of supplying the new catalysts to foreign firms.
"The response to the news has been quite overwhelming ... and much more than I anticipated," Kato said. ($1=103.31 Yen) (Editing by Michael Watson)
