Platinum sector faces its Kodak moment in fuel cell technology

* With diesel cars under threat, miners bet on fuel cells

* Carmakers roll out new battery, fuel cell vehicles

* Amplats CEO says does not want same fate as Kodak

By Clara Denina and Silvia Antonioli

LONDON, May 29 (Reuters) - Platinum miners betting on fuelcell vehicles to help boost demand for the precious metal andlift moribund prices are in danger of having their hopes dashed,at least in the medium term: electric and hybrid cars are takinga bigger share of the market.

The world's three largest platinum producers Anglo AmericanPlatinum (Amplats), Impala Platinum and Lonminare all investing in projects related to fuel cell technologies,which generate electricity that can power vehicles by combininghydrogen and oxygen over a platinum catalyst.

But analysts doubt fuel cell vehicles will rival the growthof their electric counterparts, mostly because batteryrecharging stations are less costly and already more widespreadthan hydrogen refuelling stations.

"As out of the two new technologies only fuel cells useplatinum, I guess the miners think they have no choice,"Macquarie analyst Matthew Turner said. "But people are buyingelectric cars...and that's not the case for fuel cells."

Amplats, which has invested about $35 million in the lastfive years in companies developing new uses for platinum, mostlythrough fuel cell technology, is mindful of the stakes.

"I don't want Anglo American Platinum, or any of ourpartners or customers to be a Kodak," Amplats Chief ExecutiveChris Griffith said last week, referring to the once mightyphotography pioneer that was slow to transition to digitalphotography.

"If fuel cells are not adopted, we may have no auto marketfor platinum by 2050."

An auto industry dominated by batteries will reduce platinumdemand to 2.5 million ounces in 2050 from 3.4 million ounces.But if fuel cell cars dominate the alternative vehicle segmentin Europe, platinum demand is estimated to be 6.6 million ouncesin 2050, Griffith said.

Hybrid and electric vehicles made up about 1.8 percent ofall new car sales in the European Union in 2013, twice as highas the previous two years, according to the latest figuresavailable from the International Council of CleanTransportation.

Fuel cell vehicles, on the other hand, are estimated to makeup just 0.015 percent of global light vehicle production in2025, according to platinum producer Lonmin. A total ofaround 60 million cars are produced globally each year.

"I don't believe fuel cells are going to be a positive partof the (auto) story for at least the next five years," Liberumanalyst Adam Collins said. "The costs of compacting the hydrogenand the refuelling centres - each costs more than 1 millioneuros - are just too high."

Autocatalysts - which help to make traditional cars moreenvironmentally friendly - remain the major source of demand forplatinum, accounting for roughly 3.4 million ounces a year orsome 40 percent of total consumption, with diesel catalystsusing the largest amounts of platinum.

Tighter European regulation of air pollution benefitedplatinum producers and catalysts makers over the past twodecades. But recent research shows that while diesel cars emitless carbon, they produce higher levels of other pollutants suchas nitrogen oxides.

Data provider LMC Automotives forecasts that dieselvehicles' market share in Europe will drop to around 39 to 44percent in 2022 from a peak of 56 percent in 2011.

At the same time, automakers are reducing the platinumcontent in vehicles to cut costs. Platinum prices fell tosix-year lows of $1,083 an ounce in March, hit by slowing demandgrowth and an overhang of stocks.

Fuel cells vehicles, if they do take off, will certainly bea boon for battered platinum producers. While electric cars donot need catalysts and hybrid models require small amounts,fuel-cell powered cars use between five and 10 times moreplatinum than a diesel catalytic converter, which typically usesthree to seven grammes.

"The next big shift for PGMs is fuel cells, I'm confident ofthat," Amplats' Griffith said, adding: "We need to collaborateto drive this industry transforming technology." (Editing by Susan Thomas)