Palladium’s Progress

In early 2006, the well-known platinum jewelry designer Scott Kay sent a letter to fellow jewelers singing the praises of palladium. The price of palladium was $371 per ounce and though buzz had been minimal, Kay predicted it would be the top white metal for the industry within two years.

A closer look at the inner workings of palladium production, as well as feedback from suppliers and retailers, suggests that palladium may be well suited for filling a growing niche and expanding possibilities for the jewelry industry.

The Stillwater Mine is located in Nye, Mont., and operates on the Johns-Manville (J-M) Reef, a natural ore deposit that hosts an abundance of platinum group metals, or PGMs. JCK had the opportunity to tour the mine, witnessing the work of miners who log 10-hour shifts underground in rock access tunnels. Within the ore they mine lies the treasure: shiny traces of PGMs. For every ton of rock, about half an ounce is palladium.

The mine spans a surface area 28 miles long and 4 miles wide. Below ground, it’s a maze of tunnels about as wide as a car and as high as two stacked on top of one another. Trucks regularly drive through, transporting materials and workers. There’s even an underground “shop” to service the trucks.

Geologists traverse the mine and identify likely spots for drilling. The miners, always working in pairs in case an emergency arises, use mechanized drills to blast through to the ore. They transport the ore with load-haul-dump mucking machines (yes, that’s the technical term).

The new hole from which the ore was removed—called the stop—is backfilled with sand and rock (a precaution to reduce waste and damage to the land), and the concentrates are sent to a smelter in Columbus, Mont., also owned by The Stillwater Mining Co. There, they are melted and separated. Of these concentrates, 1.5 percent is PGMs. This amalgamated portion is transferred to a refinery, where it’s separated into copper, nickel, and other metals.

Stillwater closely monitors processes for both personal and environmental safety, and though it did report one employee death in 2005, its fatality rate consistently ranks below the national rate, which in 2005 was 0.017 for every 200,000 employee hours. The managers of the mine enforce a hearing conservation program, which includes rigid noise emission standards for equipment and mandatory use of protective ear devices for miners.

To safeguard the environment, the company builds buffer zones to isolate neighboring streams from mine discharge. The mine also participates in the Good Neighbor Agreement, an environmental partnership with the community that provides information about mine operations to local citizens and involves them in planning, oversight, and decision making.

After these initial procedures, a platinum and palladium filter cake—a condensed accumulation of the metals after the filtration process that looks black and distinctlyunexciting—is flown to a third-party precious-metal refinery like Johnson Matthey. Here, it’s separated and becomes the shiny white metal jewelers and consumers are increasingly getting to know.

Palladium is used mostly for catalytic converters in automobiles. Other applications include electronics, dentistry, coinage, and photography. As far as jewelry is concerned, palladium is both alloyed with gold to create white gold (only palladium and nickel are able to do this) and used alone.

The intricate methods and procedures at Stillwater lend credence to the notion that palladium is precious and rare; its retrieval is as multilayered and time-consuming as, say, platinum. Because so much of fine jewelry is about symbolism and preciousness, this aspect of palladium is marketed—thanks to individuals like Kay and Stillwater chief executive officer Frank McAllister—along with its more obvious qualities like color and cost.

At the helm of the palladium marketing campaign is Palladium Alliance International (because what’s a PGM without an eponymous organization?), whose aim is to establish the metal in the luxury jewelry world. It’s a tricky mission, wrought with contradictory messages about a newcomer up against long-established metals like platinum and white gold.

One message projected by PAI is that palladium is just as good as and similar to platinum. Both are naturally white, pure, hard, and—as Stillwater attests—precious. Palladium looks like platinum, supporters say; by visual standards alone, it is difficult to tell the two apart. On the other hand, supporters promote an opposing message—that palladium is distinctly different from its more popular competitor. It’s cheaper. It’s less dense. It’s whiter. These mixed—though accurate—messages must be backed up in detail so that one aspect does not negate the other.

Another complicated message about palladium concerns price. Palladium is considerably less expensive than its competitors, an intuitively desirable quality. (At press time it was $339 per ounce, while platinum was $1,157, and gold was $638.) However, palladium’s price can also work against its image as a high-end metal. Kay deals with this issue by citing palladium’s low price but then insisting that, even if its price goes up, the metal is an important addition to the jewelry industry.

A final characteristic that produces a conflicting image is palladium’s weight. It’s less dense than platinum, allowing jewelers to create larger, more intricate designs without weighing down the wearer. Still, supporters avoid calling the metal light (most press materials refer to it instead as “less dense”), as density equates with weight and perceived value.

Palladium’s unique qualities make it both difficult to sell and possible to sell to a variety of markets. China has taken a particular interest in the metal, greatly contributing to a surge in palladium sales, which rose 54 percent in 2005, to 1.43 million ounces. McAllister and other corporate employees of Stillwater Mining Co. make numerous trips to China throughout the year. They’ve been delighted by the response of the Chinese, who, McAllister says, appreciate that palladium provides a luxury look at a fraction of the price of platinum and white gold. In the past year, there has been a shift in the Chinese palladium market. “There’s been some returns of palladium 950,” Ellen Zadoff, a market researcher for Johnson Matthey tells JCK, in favor of a purer version of the metal. “Now they’re working with 990,” she says—about 99 percent pure palladium. Whether or not this change has affected retail sales is still unmeasured.

Many industry leaders are echoing China’s sentiment that palladium is the white metal to watch. Frederick Goldman Inc. was the first company to sell palladium, in 2004, and chairman and CEO Jonathan Goldman is obviously thrilled that he got in on the action early. “[It’s] always good to have something new and different,” Goldman tells JCK. The company has three lines, one of which—ArtCarved—is now available exclusively in palladium. “[It’s] better than white gold, because it doesn’t turn yellow over time … we have seen unbelievable sales,” Goldman says.

Online retailer Danforth Diamond (, which has sold palladium since 2006, is similarly pleased with the metal’s popularity. “Palladium has been a great addition to our inventory,” owner Jill Renee tells JCK. “[It] has been outselling 14k white and platinum … especially true in wedding bands.”

Renee sees an added bonus to the recent promotion of palladium in the industry. She believes that, beyond offering an alternative in jewelry, it has forced retailers and consumers to be more critical of the precious metals they buy, weigh pros and cons, and make informed decisions. “The addition of palladium has increased an awareness of jewelry and the metal choices,” she says.

Of course, the jewelry industry is no stranger to traditionalists at the manufacturing, selling, and consuming levels, and some have not had such favorable interactions with palladium. “Personally, I don’t like it,” Allen Mon, president of retail store Carat N Karat Inc. in Flushing, N.Y., tells JCK. He explains that there is something valuable and symbolic in the weight of a ring or a bracelet, and that he can’t get past the instinct that “heavy metal is platinum and karat gold.” Supporters like Renee mention other drawbacks, including the fact that “the metal is a little trickier to cast.”

Another complaint, issued by jeweler Joe Rissin, is that palladium tarnishes (experiences a change in surface coating)—he has seen it turn brown—and, thus, needs to be rhodium plated. “I have made jewelry in 18k palladium, and it tarnished,” he tells JCK. “When heating it, it turns dark black to blue. That alone tells you that it could oxidize.” Palladium experts debate this claim. Jeweler Mark Mann, of the Mann Design Group Inc., has created over a dozen palladium pieces in the past two years and hasn’t encountered any problems. “To date, there has been no tarnish or oxidation,” he says.

After hearing of Rissin’s experience, Mann did a chemical reaction test, by placing a palladium piece in a chlorinated hot tub (notorious for discoloring white gold) for eight hours. No discoloration. Hoover & Strong metallurgist Stewart Grice has never seen palladium turn brown, and notes that it “is extremely noble and nonreactive.” However, he allows that it could potentially tarnish, after interacting with a sulfur or chlorine. A definitive answer to this debate does not yet exist, but jewelers like Rissin and Mann are seeking answers by consulting with others in the field and comparing experiences. “I think [palladium] is being pushed too fast, and there is not enough accurate information on it,” Rissin says.

So, what does the future hold for palladium? What is palladium’s place among other white metals? Though much has been made by designers like Kay about palladium’s ability to compete with platinum, it seems that—at least in the near future—palladium has a different market to take over. “Palladium may affect white gold [sales],” Renee says. Goldman concurs. “I think platinum will continue to do well,” he says. Palladium is for those “who have gold and see the value of having a platinum group metal.” For these people, precious palladium presents a shiny new opportunity.