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In recognition of significant changes in the composition of Catalysts & Chemicals Division, particularly following the acquisition of Synetix from ICI in November 2002, we have renamed it Catalysts Division. This better describes the division’s key markets and reflects its strategic direction. Catalysts Division encompasses three businesses: Environmental Catalysts and Technologies (ECT), formerly Catalytic Systems; Process Catalysts and Technologies (PCT), previously Chemicals, which incorporates the former Synetix businesses; and Fuel Cells.

Environmental Catalysts and Technologies

ECT had a strong year in the face of worldwide economic uncertainty. In North America, vehicle sales fell and our catalyst volumes fell slightly as a result. However, despite the well publicised problems of the US car industry, our business grew, driven by the benefits of our new technology and a more than doubling of sales into the heavy duty diesel vehicle retrofit market. In Europe, vehicle sales also fell slightly during the year. However, we were able to grow our market share following the introduction of advanced products that more cost effectively meet emission regulations and both volumes and sales were well up on 2001/02. During the year we further expanded our plant near Johannesburg to meet growing demand for catalysts made in South Africa. In Asia, our new manufacturing facility in China is fully operational and profitable. We also achieved significant new heavy duty diesel retrofit business in Japan. Asia has grown to become the largest producer of light duty vehicles, ahead of both North America and Europe. Johnson Matthey is well positioned to benefit from this growth and our share of the Asia market is increasing. Production lines incorporating our new Precision Coating technology have now been installed in all our plants around the world, and additional capacity has been added in Asia. In order to maintain our technological leadership we have begun a major expansion of the business’ European technology centre, including additional engine and vehicle testing facilities. This investment will allow us to develop new, more advanced products to meet forthcoming emission legislation for both gasoline and diesel vehicles.

Process Catalysts and Technologies

PCT’s businesses experienced mixed fortunes in 2002/03. Sales were well up on prior year, reflecting five months’ contribution from the Synetix businesses. Underlying sales however were flat with difficult conditions in many markets. Margins in the platinum group metal (pgm) refining business were impacted by lower palladium and rhodium prices and overcapacity in subdued markets and profits were down. PGM catalyst sales were good, particularly to the pharmaceutical and fine chemical sector. PGM catalyst sales in China grew well and during 2002/03 we established a pgm chemicals manufacturing facility in Shanghai. The markets of India and the Pacific Rim offer excellent growth opportunities. We have started construction of a process catalyst plant in Taloja, India, which complements our presence in China.
The Research Chemicals business, continued to achieve strong growth including a good contribution from Avocado Research Chemicals, acquired in February 2002. During the year the business expanded its sales and distribution facilities in both the USA and Germany and doubled manufacturing capacity at Avocado in the UK. Good progress was also made on growing its presence in China and Japan.
The acquisition of Synetix from ICI in November 2002 has brought leading base metal process catalyst technology that complements our strong position in precious metal catalysts. It has elevated Johnson Matthey to a strong number two in the global catalyst market and also brings with it important growth opportunities in the emerging markets for gas to liquids (GTL) and chiral catalysts (see the feature on pages 14 and 15). In the five months since acquisition, the business has performed very much in line with our expectations and we have now fully integrated the former Synetix businesses into the division.

Fuel Cells

The Fuel Cells business continued to make excellent progress in 2002/03, taking several important steps towards establishing itself as a supplier of choice to the leading companies in the emerging fuel cell industry. Critical to this has been success with supplying Membrane Electrode Assembly (MEA) development samples for durability and performance testing in customers’ early commercial products. This validation phase is expected to be followed over the next few years by commercially available products for premium stationary, back up and portable power applications. This will lead to mass produced products for the transport sector at the end of this decade and into the next.
The first phase of our dedicated MEA factory at Swindon, UK was completed during the year. This is the initial stage in transitioning fuel cell technology from research and development into commercial manufacturing and will enable the Fuel Cells R&D facility at Sonning Common, UK to concentrate on supporting technology development for the future.

 
     
 

 
     
   
  In ECT we continue to invest in research and development and testing capacity to cost effectively meet ever tightening emissions legislation and retain market leadership. This year, R&D activities have continued to focus on improved three way catalysts for petrol vehicles and the development of products for lean burn engines, especially diesels. We are working in partnership with many of the world’s leading heavy duty diesel engine manufacturers to prepare for emissions regulations coming into effect over the next five years. In PCT excellent opportunities are being identified to leverage the benefits from integration of the former Synetix businesses and our complementary portfolios of pgm and base metal catalysts. Good progress is being made in GTL both in synthesis gas generation, via customer demonstration of Advanced Gas Heated Reformer technology and pgm promoted catalyst development, and in custom manufactured Fischer Tropsch catalysts. During the year we have developed a range of polymer based Smopex® metal scavengers, which remove trace metal contaminants in pharmaceutical and fine chemical manufacturing.  
     
 
 
     
 

Process Catalysts and Technologies
- Catalysts for Growth

Within Catalysts Division the Process Catalysts and Technologies (PCT) business brings together Johnson Matthey’s former Chemicals activities with those acquired with Synetix in November 2002. PCT thus consists of the group’s precious metal based heterogeneous and homogeneous catalysts business, which predominantly uses the unique catalytic properties of the platinum group metals, and the leading base metal (copper, nickel, cobalt, titanium, etc) process catalyst technology acquired with Synetix. It also encompasses our platinum group metal refining and chemical products businesses, the Tracerco diagnostic services business and our Research Chemicals business which supplies products to academic and industrial research organisations via its Alfa Aesar and Avocado catalogue operations.
The acquisition of Synetix brought to Johnson Matthey a global catalyst business that serves a range of market segments including ammonia, methanol, chemicals, fine chemicals, edible oils, oleochemicals, oil and gas and polymerisation. These activities complement the group’s strong position in precious metal catalysts for a wide range of markets including emission control and process catalysts for the fine chemicals and pharmaceutical industries. The former Synetix business consists of two strategic business units: PCEO (Polymers, Chemicals and Edible Oils) and AMOG (Ammonia, Methanol, Oil and Gas), reflecting the major global markets that they serve and in which they have market leading positions.

PCEO

Within PCEO, we are a leading supplier of polymerisation catalysts for the manufacture of plasticisers, acrylates, inks and coatings. In addition the Polymers segment also provides polyester manufacturers with innovative titanium based catalysts, which, as part of a tailored package, can increase output by up to 15% without the need for investment in new plant. These catalysts also have significant environmental advantages over antimony based catalysts that are commonly used in polyester production.
For the inks segment, the business is the industry leader in adhesion promoters, catalysts that are added to inks to enable them to stick to flexible packaging. The VERTEC™ range of adhesion promoters sees widespread application in packaging where designs are commonly printed on flexible plastic films, for example for crisp packets and confectionery wrappers. Without these products, the brightly coloured designs that are so vital to the marketing of many consumer products would not be possible.
In the coatings industry, the PCEO business is the industry leader in thixotropic agents, additives that go into paints and other products to modify their flow characteristics. For example these additives are used in water based paints enabling them to be almost a solid gel in the pot but to flow smoothly when applied to a surface and not to ‘run’ once the paint has been applied.
For the edible oils and oleochemicals sectors, PCEO manufactures high performance catalysts that are used in the manufacture of products such as margarine, chocolate, cooking oils and other foodstuffs (edible oils) and of soap, cosmetics and lubricants, for example those used in shaving foams (oleochemicals). An interesting example of the application of catalysis in the food industry is in modifying the melting point of chocolate products so that they ‘melt in the mouth and not in your hands’.
The PCEO business also supplies process and purification catalysts for the chemicals sector. These catalysts are used in manufacturing processes for a wide range of specialised chemical products and in environmental applications to treat a range of gaseous and liquid streams.

Chiral Catalysis

One exciting area is the application of chiral catalysis in the pharmaceutical industry. This is a field in which both the group’s precious metal process catalyst business and the acquired businesses have a strong position. Both have extensive catalyst technology, expertise and research resources that complement each other and place us in a strong position to serve this growing market. The US Food and Drug Administration and regulators around the world are increasingly requiring pharmaceutical companies to identify and produce a specific chiral version of a drug. This is where the pharmaceutical ingredient can exist in two different forms, which are mirror images of each other but only one of which has the desired activity. The use of specialised catalysis is one of the main ways of manufacturing chiral drugs, another being chiral separation using simulated moving bed (SMB) technology, an area in which Pharmaceutical Materials Division’s Pharm-Eco business has a strong position.

AMOG

Within the AMOG strategic business unit, its KATALCO™ and PURASPEC™ ranges of catalysts are to be found in over half of the world’s methanol production plants. Methanol is a fundamental building block in the chemical industry and is a feedstock for a wide range of products. It is presently used in the manufacture of lead free gasoline and is tipped as a replacement for oil based fuels and as a carrier of hydrogen, for example for use in fuel cells.
Ammonia is another important building block for the world’s chemical industry. It is a crucial product for the global food chain as it is extensively used in synthetic fertilisers that ensure the productive growth and improved yields of crops around the world. The AMOG business provides high performance catalysts, specialist applications knowledge and services technology to ensure optimum performance in the highly competitive ammonia industry.
In oil refineries, AMOG’s products and technologies are extensively used in the production of hydrogen via the steam reforming process as well as for the purification of both liquids and gases produced by the refining process. Catalyst technology is playing an increasingly important and valuable role around the refinery, helping to meet growing market demand for its wide range of products, improving the industry’s environmental performance and enabling it to meet legislation requiring cleaner, greener fuels. In the natural gas industry, the business has a strong position in technologies to remove impurities such as sulphur, utilising its research and testing expertise to supply packages that are tailored to meet individual customer needs.
Hydrogen rich gases are also used in a wide range of industrial processes, including oil refining, chemical production, iron ore reduction and the production of Towns Gas. AMOG produces a range of innovative catalysts to serve the hydrogen market.

 
     
 

Gas to Liquids

Another exciting opportunity for future growth is in the new, high technology gas to liquids market. Gas to liquids (GTL) is a rapidly expanding sector manufacturing ultra clean diesel fuel from natural gas. This is an area that has strong environmental as well as energy security drivers. It provides a means to use the world’s massive reserves of stranded natural gas to make sulphur free diesel fuel. This extremely pure fuel can be blended with diesel produced via the traditional oil refining route to make the ultra low sulphur diesel that is increasingly mandated to help meet ever tightening vehicle emission standards around the world.
GTL is a multi stage catalytic process and, prior to the acquisition of Synetix, Johnson Matthey was involved in providing catalysts to some of these stages. However, Synetix has brought catalysts and expertise that enable the group to supply the full range of catalysts to the GTL process and to work in partnership with leading energy companies to develop cost effective technologies for this growing market. It is estimated that the market for catalysts for the GTL process could be worth over $400 million per annum by 2010.

Tracerco

In addition to providing advanced catalysts to customers worldwide, PCT provides applications knowledge and services technology through its Tracerco business. Tracerco provides a range of process diagnostic services and specialist instruments used in enhanced hydrocarbon recovery, enhanced hydrocarbon separation and in non-intrusive inspection areas of the upstream oil and gas market. These products and services are used to increase production rates, lower overall production costs and increase environmental compliance by most oil and gas producers. It also provides unique ‘taggant’ technologies to the process industry, which are used in various applications from reservoir assessment to fuel anti-adulteration schemes. Tracerco was awarded the 2003 Queen’s Award for Enterprise for the TRACERCO Profiler™, an instrument that uses advanced measurement technology to determine and control the contents of oil and gas production separators.

 
     
 
     
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