Innovating A Solution Before The Market Asks For It

The green color represents the gold of the new catalyst (Image credit: Johnson Matthey)

“The challenge came from the business,” said Martin Hayes, an R&D director at Johnson Matthey. “They were talking to customers deep in China, where most Western suppliers don’t have the much visibility.”

It was 2006, and they saw manufacturers buying 10,000 tons of mercury catalyst annually and using it to transform “feedstock” domestic coal into vinyl chloride monomer (“VCM”), which is the building block of PVC, the plastic in everything from pipes to window profiles and artificial leatherMercury isn’t friendly to humans or the environment.

“We did a quick review of the information, and it was very quickly apparent to us that this was a huge problem with no proper solution,” said Sebastiaan van Haandel, Johnson Matthey’s VCM business manager.

“If we could capture even 5% of that business, it would be a huge opportunity for us.”

What informed that insight was a research paper that an academic at Cardiff University named Graham Hutchings had written in 1985, in which he suggested that gold could work as a catalyst in those VCM processes. Johnson Matthey funds a lot of core research on catalysts, including work at Cardiff, and has a history of working with precious metals that goes back to 1817.

“It wasn’t on our competitors’ radar,” van Haandel said, adding that “the working solution wasn’t crystal clear, but we knew we didn’t have to start from scratch.”

It also didn’t have any customers asking for the innovation, but the company put a full-time lab guy on it, and other employees contributed part-time. The early days were tough, according to Hayes and van Haandel, as test results weren’t as encouraging, and feedback from customers was less enthusiastic than hoped.

Then the UN called.

Well, not a telephone call, per se, but in 2009, the UN’s Environment Program decided “to initiate international action to manage mercury,” which would become, by 2013, the Minamata Convention on Mercury. China would be a signatory to the agreement.

“The project went from a development push to a market pull,” said Hayes. More resources were put on it, most notably a business development manager who began imposing cost parameters on the ongoing science.

That created another set of difficulties for the team, since using gold was one thousand times more expensive than mercury. They knew that the solution proposed in that 1985 article could never be economical. Another challenge was that they needed to be able to drop the new catalyst into existing manufacturing processes, thereby minimizing excess effort and cost for clients.

The combination of science and margin management paid off, however.

“The solution was to use very little gold in a special way, so it would last much longer than mercury, and thereby not require replacement as often,” van Haandel explained. “We reduced the total cost of the catalyst component in VCM by using less of it, and using it for longer.”

There’s IP behind the solution, and scientific papers written on how they cracked the science, according to Hayes, and pricing innovations, like usage charges, for customers used to buying the lowest cost bids.

“This project is an example of how speculative projects can pay off for us,” he added.