Stillwater Mining Co. is the largest primary producer of palladium, which has many applications and is increasingly used in jewelry and catalytic converters.

Premier Business Partners:

Jennmar Corp. Mining Technologies International Inc. RDO Equipment Co. Wilson Mining Products Smith Power Products Inc.

With the rising price of gold, Stillwater Mining Co. believes this is the perfect time for palladium. “There’s a saying in the jewelry industry that every future bride walks in wanting platinum, but most walk out with white gold,” Frank McAllister says. “We believe those brides should walk out with palladium.”

The chairman and CEO of Stillwater Mining has every reason to want palladium to become the metal of choice – the company is the largest primary producer of palladium in the world. “All other companies produce palladium as a byproduct,” McAllister asserts.

Palladium and other platinum group metals are highly diverse and used in a range of applications, including fuel cells, hydrogen purification, electronics, dentistry, medicine, water treatment and coinage. Jewelry and catalytic converters are two growing areas for palladium.

“We started a marketing initiative called the Palladium Alliance International to support the jewelry industry’s move to palladium as the price of gold and platinum skyrocketed, and to position palladium as white, bright and still affordable,” he explains. “Already, we’ve made positive gains. This year, about 20 percent of the world’s palladium was going into jewelry – and that’s up from zero percent in 2003.”

Palladium was first used for jewelry when platinum was declared a strategic metal and reserved for military use in 1939. Palladium alloys developed for jewelry typically contain 95 percent palladium, about 5 percent ruthenium and have trace amounts of other metals proprietary to their developers. These 950 palladium alloys are white, noble, malleable, lightweight, hypoallergenic, and easy to finish and polish, the company says. Furthermore they do not require rhodium plating, and have desirable, platinum-like setting and forming characteristics.

Palladium is a versatile metal, and McAllister notes about 50 percent of the world’s palladium is used in catalytic converters. “The demand for catalytic converters isn’t abating, especially as the popularity of diesel engines continues to grow,” he says. “And while diesel emission control is a platinum based technology, we see the demand for palladium going up in this market as well.”

Headquartered in Billings, Mont., Stillwater Mining is a vertically integrated organization – developing, extracting, processing, smelting, refining and marketing palladium, platinum and associated metals from a geological formation in southern Montana known as the J-M Reef, which includes the Stillwater Mine and the East Boulder Mine. This is the only known significant source of platinum group metals in the United States and one of the significant resources outside Russia and South Africa.

The J-M Reef is the richest-known palladium deposit currently being exploited anywhere in the world, the company says. Active mining from this location produces a high-grade ore containing a palladium:platinum ratio of just over 3:1.  After mining, the ore is refined by Stillwater at a site near Columbus, Mont., to a purity of 60 percent PGMs, then shipped to Johnson Matthey for final refining of palladium, platinum and other metals at a facility in New Jersey.
   
Local Leaders   
Stillwater, like others in the industry, has needed to address the issue of its work force, but McAllister says fostering safety and restructuring its work schedule has helped in recruiting efforts. “Years back we set our work schedule to attract miners from outside Montana, with seven days on and seven days off,” he explains. “This was conducive for the miners that we recruited from states like Idaho, Nevada and South Dakota. They could work for seven days and then spend a week at home with family.”

However, with the booming mining industry Stillwater Mining is looking to attract more local workers, so two years ago it started a six-month training program geared toward younger, less experienced employees. “We lowered our recruitment age from 21 to 18,” McAllister explains. “The training program is geared toward these less-experienced recruits, and we introduce about 100 of them in the program each year. It has a heavy emphasis on safety and gives them a strong foundation to begin a career in mining. It also allows them to stay local and not have to leave the state for work.”

The focus on a local work force has facilitated a change in the company’s work schedule, increasing hours worked per week from 35 to 45 – “thereby benefitting our miners with increased wages, and the company with reduced contractor costs and a more affordable distribution of rising health care and workers compensation costs,” McAllister explains. “The schedule change, as might be expected, resulted in significant attrition and reduced productivity levels in our remaining newer workforce. We are focused on rebuilding both.”

Safety First   
Experienced employees are also focused on the safety program and McAllister says in the last six years, Stillwater Mining has reduced its accident rate by 75 percent. “We are well below the national average, and in fact, we’re helping to drive the national average down,” he says. “We’re pleased with our results and plan to make sure it continues.”

Stillwater tracks safety performance in two ways. The first is the internal tracking of safety efforts and activities completed by areas or individual work teams. These proactive efforts are the backbone of the safety system and the drivers for continuous improvement, it says.

The second area of tracking is the incidence rate. This method of measurement allows Stillwater to compare its performance to that of other mining companies. Stillwater uses a workplace injury classification that includes lost time and restricted work injuries, medical treatment injuries and total reportable injuries, the company says.
    
Minimal Impact
McAllister points out that Stillwater Mining has an “extraordinary reputation for environmental awareness,” and the company works hard to have as minimal an impact as possible. During the past year, the company introduced a 50/50 blend of biodiesel and petroleum diesel in its mine operations reducing DPM and its carbon footprint.  

Because the company’s mining operations are underground, it has a reduced footprint on the mountains of Montana – next to wilderness area just north of Yellowstone Park.

The company has also taken strides to transform its mine operations from mechanized bulk mining methods to less mechanized and more selective mining methods. Bulk mining is being de-emphasized over time at both mines.

At the Stillwater Mine, up to 35 percent of ore will be mined by various captive cut-and-fill mining methods and 65 percent of ore will be mined by mechanized ramp cut-and-fill mining methods. At the East Boulder Mine, up to 100 percent of ore will be mined by various captive cut-and-fill mining methods. This transitioning of mining methods emphasizes margin and sustainability.

Bright Outlook
Looking forward, McAllister says the company plans to continue staffing up and training its work force, and increasing production.

“This is a time for us to rebuild our productivity levels,” he says. “We are looking to continue recruiting, continue transforming our mine process and grow the company. We think we can bring production up from a 600,000-ounce level to a more than 800,000-ounce level in the next five to 10 years.”