Platinum
The Platinum business includes Johnson Matthey's platinum group metal (pgm) marketing and trading activities together with its pgm product manufacturing and sales businesses. Strong demand for both metal and fabricated products coupled with volatile pgm prices contributed to another year of excellent profit growth from the Platinum operations in 1998/99.

Trading activities benefited from the volatility created by a further year of disruptions to pgm supplies. Delays in Russian shipments of platinum and palladium in the first quarter of 1998, which were repeated in 1999, sent prices and lease rates sharply higher. The price of platinum reached a peak of $429 per ounce in mid April 1998, falling back on resumption of Russian supplies before recovering some ground in early 1999. Palladium had a spectacular year fuelled by the continued steep rise in autocatalyst demand. With Russian palladium sales concentrated in the second half, volatility was exceptional. Palladium fixed at a record $417 per ounce in May 1998 with lease rates oscillating between 150-200% in this period. The price retreated to trade in a $270-300 range for much of the next six months before a renewed suspension of Russian shipments early in 1999 saw palladium climb back above $350 per ounce. The average price of platinum in 1998/99 was $368 per ounce. Palladium averaged $310 per ounce, an increase of 50% over 1997/98.

Demand for the platinum group metals reached record levels in 1998/99, largely unaffected by the erratic pattern of Russian supplies or the economic problems affecting much of Asia and Latin America. Consumption of platinum rose due to a rapid expansion of platinum jewellery fabrication in China. Palladium demand again outpaced platinum and has almost doubled in the last five years driven by rising autocatalyst usage.

Platinum's manufacturing operations performed very well in the year. Demand for higher technology products boosted growth and profitability in both US and European markets.

Gold and Silver
Johnson Matthey is the world's largest refiner of gold and this year refined in excess of 1,900 tonnes of silver, placing the company firmly in the top two silver refiners. The gold and silver refining business continues to achieve steady growth in both market share and profits. 1998/99 was another excellent year for the business, driven by the refining of large volumes of secondary material resulting from the economic crisis in the Far East and by continuing growth in primary refining business from South America, Africa and Australia.

Johnson Matthey's Hong Kong operation was particularly busy during the first half of the year refining dishoarded gold from South East Asia, though this activity declined somewhat in the second half. The refinery in Royston, UK continued its programme of upgrading and expansion. In Australia, a significant investment in new refining processes was completed during the year.

Worldwide, mine production of gold increased to 2,555 tonnes in calendar year 1998.* Secondary supplies for refining exceeded a phenomenal 1,200 tonnes. Demand for gold products reduced in 1998 but this followed a record year in 1997. Current indications are that demand is increasing again in the important, traditional markets of India and the Far East.

Johnson Matthey is well positioned to continue to grow its market share and profitability in all its gold and silver businesses. This will be achieved by building on Johnson Matthey's unrivalled reputation for integrity and the highest levels of customer service.

* Source - GFMS Gold Survey 1999