My personal experience with silver in an industrial environment

I just talked to the catalyst guy who is here monitoring performance. He called back to California where the catalyst is made and they told him that 90% silver reclamation is typical from spent catalyst. Not too shabby!

 

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Good update, thank you Swagge. With a high recovery like that I am sure this process could still be done even at $100 silver.

 

Exactly!

 

LOL. How did I know that was coming.

I still stick to my point that every industry is different, and some applications cannot use silver at $5, some at $10, and so on. The ones who cannot use at $5 are already switched over. Unless someone did a demand curve study recently we will not know at what prices industry cannot afford the input anymore, or expected demand drops at certain price points.

 

Per my numbers in the original post, a 10% loss of 90,000 lbs. of pure silver is a 9,000 lb. yield that cannot be reclaimed. In this ONE catalyst change at ONE plant we are talking about 131,250 troy oz. of new silver required every 1-2 years. Mutiply that by all of the EO reactors who use this process and you will start to see how much silver is being consumed.

 

Yes, but there is over 700,000,000 ounces of newly produced silver per year, with that total going up every single year in the last 7. There are also many new mines being planned at these higher prices. So while the usage of silver is large, the production is large as well.

Did you ask the rep if there were any substitutes available? Maybe not as efficient, but still substitutable?

Thanks again for your post. It has been very informative.

 

One thing we seem to be forgetting is that before any industry would consider making a change to how they manufacture their finished product (based on the price of the goods necessary to make it) would be whether or not the demand will handle the mark up in price of the final product. So, if silver goes up, then the cost to make one unit of 'X' will go up in price to compensate for the higher cost to manufacture it.

In this case the silver is a small component in the production of Ethylene Oxide which is used for many things. For example it is used to synthesize Ethylene Glycol. Ethylene Glycol also has various uses but 60% of it's consumption is for the production Antifreeze. World demand for Ethylene Glycol and Antifreeze remain high, especially in Asia.

Couple of Articles
2004
http://www.search-autoparts.com/sea...in-anti/ArticleStandard/Article/detail/132052

Current price of Antifreeze is around $11 to $12 a gallon.

2007
http://www.prlog.org/10014070-deman...ene-oxide-will-grow-by-robust-6-5-7-year.html

2010
http://www.lookchem.com/news/price/2010-9-1/2154.html

It seems to be that the demand is so high that ethylene oxide Industry will want to continue to use silver for two main reason. One, the high demand will almost certainly cover the production costs and then final product mark up. Two, stopping production to change the way you manufacture something would be devastating. If a company basically run 24 hours a day the whole year and stops even for a couple days or hours you are losing so much money. So until people stop paying for the final product at a mark up price I can't see why anyone would want to change their process at any step of the manufacturing process. Silver will be used industrially in this process for years to come in my opinion.

 

Maybe in this application. I will tell you from experience that industry will make changes that seem minor to you. We change our formulas and make changes all of the time to save a quarter of a cent a pound. We spent $400,000 to be able to make a change saving half a cent a pound. Profit is profit, and when you make hundreds of millions of pounds a year it adds up. Saying that an industry will continue to ues it, without knowing possible replacers, their price and efficiency, is basically just guessing. No industry can afford to be less efficient than its competitors.

 

You are correct. I am sorry if I sounded like I was making a general assumption across the board. If profit margins diminish or if their is a way to greatly increase the profit margin to a point that outweighs a vast amount of negative possibilities (stoppage in manufacturing, diminished quality of product or the risk of further production stoppage due to the change) then that is something industry has to always be looking out for to stay competitive. But with demand so high in this case it seems like supply is still quite a bit behind the demand and profit margins should continue to maintain at high.

 

rrekowjr, I see that your location is Martinez, CA. Can you comment as to whether or not you are involved in EO catalyst production?

 

For all of You silver fanatics.....this is without a doubt the most comprehensive site about silver out there. It goes into detail about how there are few substitutes for silver on an industrial level as well. Everyone who is either an investor, collector, or just curious about the world of silver should see this site. http://www.silverinstitute.org/silver_uses.php

 

I don't, however an old buddy of mine used to work at the Shell Catalyst Plant. Although, I must say I acquired some knowledge in conversations with him, I have learned an abundance more here today and I look forward to holding a more informative conversation with him next time we speak. And if he has any info on quantities of silver used in production I will gladly pass on any info he may have but I am not sure he was in a position to know that or not.

The funny thing about Martinez is that for being a pretty small city, I always seem to meet someone who has heard of it. Usually because it is the birth place of Joe Dimaggio or the disputed birthplace of the Martini but now I can add that someone knew Martinez because of EO Catalyst production!

 

I would just point out that 700 million ounces of silver is only about $14 billion. This is a tiny amount of money if a few pension funds, hedge funds, and institutional investors jump on the silver band wagon. Or even if some of the short sellers in the futures market are forced to liquidate their positions because they violate the new CFTC position limits.

Regarding the ongoing debate about price and demand, I think it might be clear if you invert the problem. Silver prices have risen from $5 to $20 with demand increasing at the same time. So rather than supporting your theory that higher prices will lessen demand, I think this clearly demonstrates that silver has no close substitute that performs as well in industrial applications that require silver's performance [e.g., as the most reflective metal and best electrical conductor, or as a biocide] at prices close to present levels. Maybe copper is a substitute for some applications, but if it results in a reduction of performance for a 1% cost savings, the swap probably won't occur. Of course there is some theoretically high price at which industrial demand will weaken [but investment demand may soar], but apparently we are nowhere near that level yet.

 

No problem! I'm glad to help bring my personal daily dealings with silver and industry to people who aren't aware of one of silver's many roles. The catalyst tech says that there are no known acceptable silver substitutes for EO catalyst at this time. I'm sure they are always looking for a cheaper substitute, but current technology is limited to silver impregnated catalyst.

 

Within limits, I think this is a true statement for many industrial applications.

 

Well, we can deduce that whatever the cost of recovery including transport, etc. is less than the cost of aquiring Silver from a smelter. If we had an idea of the price of Silver when the recovery process was started, we could add inflationary costs based on fuel prices and get a good idea what is happening cost wise. I should think. That could give us a "base price" for Silver in that application anyway.

gary

 

Swagge1, As I understand the process, silver isn't being consumed n the process chemically, so the amount that can not be reclaimed remains on the old ceramic carrier? If so, what do they do with the old ceramic carriers? Do they crush them, bury them, sell them to refiners? As the 10% silver still must be in/on the ceramics, it doesn't disappear. I can't see that much silver being lost and not sent to a secondary refiner for reclamation, but I am not in the business.

Jim

 

I am not sure as to how the 10% silver gets "lost". Our process uses pure oxygen and ethylene as feed to the catalyst to convert it into EO. You would have to assume that some of the catalyst is oxidized by the oxygen and lost that way. The catalyst is very dusty and the dust gets on everything. Most of the dust is reclaimed, but some of it gets lost to the atmosphere as well as getting all over clothing, tools, and respirator cartridges. Some silver is probably lost by dust being blown off of the catalyst while the reactors are in service and ending up in finished product or waste streams in the ppm range. I think that the old ceramic carrier is crushed and sent to landfills. It is probably not cost effective to reclaim that last 10% of silver if in fact it is even there to be reclaimed. I have seen catalyst carrier used as gravel in parking lots before. I hope this answers some of your questions.

 

Catalysts vary a lot in the amount recoverable. I have read a lot of platinum catalysts, and understand that in some processes the entire amount of platinum is lost, in some only a portion, and in others it never is lost. Theoretically of course a catalyst is never lost, but in production realities there usually is and that is why I asked about it. I am sure in platinum catalysts it would be worthwhile to take further measures to reduce loss, but some is unavoidable. Basically in the platinum article I read they detail the movement away from platinum as prices rose, specifically in those industries where loss was heavy and unavoidable. Most of those industries use palladium or another platinum group element now.

I think gave Swagge some excellent examples of losses that can be experienced in production, even though theoretically a catalyst is never "consumed".

 

Thanks guys. I am following most of this, but to keep is simple enough for my simple mind, are we saying that 10% of the Silver cannot be recovered because it can't be found ? And another 10% or so can be recovered, but not in a manner that is cost effective ? Leaving a net loss of about 20% ?

Or am I reading it wrong ?

gary