Johnson Matthey’s Advanced Coating Technology (ACT™) is used to coat thin layers of platinum on ceramic components used in manufacturing high technology glass for liquid crystal displays and other applications

Small gold bars used by jewellery manufacturers and for investment around the world

Johnson Matthey’s medical components business manufactures parts for devices used in surgery

Platinum rings made in China, which became the world’s largest market for platinum jewellery in the year

Precious Metals Division had an excellent year with operating profits up 26% on last year at £57.4 million. The division's global Platinum activities, which encompass marketing, trading and fabrication, advanced strongly as the platinum group metal (pgm) markets experienced strong demand and record prices. Conditions in the gold and silver markets were less buoyant and profits from our five refineries around the world declined slightly.

Platinum
The markets for platinum and palladium, already nervous following record deficits in the previous year, recorded further shortfalls in 2000/01 as supplies failed to match strong demand. Prices reacted accordingly with platinum reaching a thirteen year high in January 2001 and palladium achieved an all time record in the same month. Despite the high price, demand for platinum jewellery remained firm, driven by continued growth of Chinese demand, which exceeded Japanese jewellery offtake for the first time. Platinum also benefited from its increased use in autocatalysts as diesel cars, which rely on platinum based catalysts, captured a greater share of the European market. Industrial demand for platinum also rose, led by its use in the manufacture of computer hard disks and glass for liquid crystal displays.

The palladium market had a remarkable year as strong demand, especially from the automotive and electronics sectors, outstripped mine supply. The market remained reliant on metal from Russian government stockpiles, supplies of which were often erratic and restricted.As a result, the price was volatile, rising from $585 at the start of the year to $1,090 in January 2001 and finishing 2000/01 at $738 as consistent Russian selling appeared in the final quarter. The high prices stimulated an increasing search for less costly alternatives; in the case of the dental and electronics industries this will lead to the growing substitution of palladium by gold and nickel respectively. The auto industry also took steps to reduce its dependence on palladium as several car companies announced plans to introduce new, high technology platinum catalysts on some gasoline cars, a trend which will boost platinum demand in future years. The opportunities provided by strong pgm demand and buoyant prices in 2000/01 boosted profits from the division's marketing and trading operations in the UK, USA and Hong Kong. The average price of platinum for the year was $580, 42% higher than 1999/00, whereas palladium was 83% higher at $779.

Profits from the division's pgm manufacturing operations made further advances during the year. Strong growth of new higher margin products for the automotive and electronics sectors was supplemented by steady growth of more traditional products. Our medical components business, which manufactures pgm products for non-invasive surgical devices, also had a good year. In February 2001, we took the opportunity to expand the product range of this business by acquiring Shape Memory Applications, Inc., a manufacturer of medical components located in San Jose, California.

Gold and Silver
Johnson Matthey's gold and silver refineries in Salt Lake City (USA), Brampton (Canada), Royston (UK), Melbourne (Australia) and Hong Kong maintained their world leadership position in difficult trading conditions. The gold price, which has been weak for several years, has resulted in primary mine output stagnating at around 2,600 tons per annum and depressed the availability of secondary materials. Despite this, the volume of input to our refineries remained strong but the increasing pressure on margins impacted profitability. Revenues for our internationally recognised bullion bars remained good. During the year the division's Canadian business was rationalised to improve profitability.