Entire Annual Report - Anglo American Platinum

Chairman’s Statement" (continued)Chairman’s StatementPlatinum use in the autocatalyst market is expected to continue to increasein the short to medium term. Ongoing growth in demand for dieselvehicles, coupled with the concerted effort by the automobile industry toreduce its reliance on palladium, is expected to more than compensate forany potential decline in vehicle sales as a result of economic weakness insome of the markets. Demand for platinum in industrial applications isexpected to continue to grow, driven by increasing offtake in the electrical,information technology and other industrial sectors.With gross autocatalyst demand approximating newly mined supplies, otherpalladium markets are entirely dependent on Russian sales from stock.Demand for palladium in autocatalysts is likely to continue to grow in theshort term, but a degree of substitution is expected to result in a decline inpalladium offtake in the electronics and dental sectors. Ongoing growth isexpected in rhodium demand in the autocatalyst sector.Business strategyAnglo Platinum’s goal is to create value for stakeholders by developing themarket for platinum group metals and by expanding into the growthopportunities thus created, while continually seeking to improve its positionon the industry cost curve.EXPANSION PROGRAMMEIn the Chairman’s Statement for 1999, shareholders were informed that,owing to the projected growth of demand for platinum and the prospect ofdiminishing supplies of Russian metal, the Group was expanding itsoperations with a view to achieving a productive capacity of 2,65 millionounces by 2003. The increase in production would flow in part frompreviously announced projects (the Bafokeng-Rasimone Platinum Mine, theMiddelpunt UG2 project at Atok, and the expansion of PPRust’s capacity).The balance would come from other expansions at existing mines and fromnew projects, including the then recently announced Maandagshoek project.In May 2000, the Group announced that its ongoing assessment of supplyand demand fundamentals for platinum indicated more favourablemedium-term prospects for jewellery, industrial and autocatalyst demandthan had been previously forecast; and that, accordingly, the Board haddecided to increase Group production from the 1999 level of some 2 millionounces of platinum to 3,5 million ounces by the end of 2006. The additionalmetal would be sourced from a number of new mines as well as from theexpansion of existing mines in South Africa. Anglo Platinum had alreadyTHE BOARD had decided to increase Group production from the1999 level of some 2 million ounces of platinum to3,5 million ounces by the end of 2006.14