ANNUAL REPORT 2001 - Anglo Platinum

Chairman’s Statement (continued)12 00011 00010 000Average monthlymarket prices(Basket price per Pt ounce-SAR/oz)9 0008 0007 0006 0005 0004 0003 0002 0009798990001Italian and German manufacturers producemost of their platinum jewellery for export.Platinum’s image is firmly established in China,now the world’s largest market for platinumjewellery.A marketing campaign was launched by the PGIin India in September 2000, involving jewellerymanufacturers and retailers in Delhi and Mumbai,and since extended to other cities in 2001.FUEL CELLSInterest in fuel cell technology has accelerateddramatically over the past decade, largely onthe back of rising concerns about environmentaldegradation. Fuel cells do not burn fuel, thuseliminating the air pollution associated with fossilfuels. Almost all prototype fuel cell vehicles arepowered by the proton exchange membrane fuelcell, which uses platinum as the primarycatalyst. All major automobile companies nowhave fuel cell programmes. At present, demandis small, but gradual medium- to long-termgrowth, first in stationary fuel cells and laterupon the commercialisation of fuel cell vehicles,is envisaged. By 2010, it is projected that totalfuel cell demand for platinum will have reached500 000 annual ounces, but massive growthBUSINESS STRATEGYSTRATEGY REVIEWPGM resources ‘in the ground’ far exceeddemand for these metals and additional PGMdemand must be created to give value to theseresources. In 2001, Anglo Platinum spentR251 million on jewellery promotion andR812 million in commissions and discountsto those users who fund research anddevelopment into new applications. In this way,it maintained the viability of the PGM orereserves to which it has access, as well as thoseof a rising number of new entrants.Anglo Platinum’s strategy is driven by marketconsiderations not by the size of its resource.As part of the Group’s ongoing review of itsstrategy, underlying market assumptions wereanalysed in the light of the looming recessionand, later in the year, of the September 11attacks in the USA and the ensuing US actionsin Afghanistan. Downside and upside scenarioswere examined in detail.It was concluded that, even in the worst case,demand available for Anglo Platinum productionby 2006 remains at 3,5 million ounces ofplatinum. Under this “downside scenario” furtherwould continue to be pursued. It is importantto note that, in all scenarios examined, it wasassumed that competitors would continue withtheir announced expansions.The Board is pleased to confirm that its growthstrategy, first announced in 2000, remains inplace. However, it is emphasised that AngloPlatinum is not a swing producer. The Group willdo all that it can to use its superior marketintelligence to anticipate and then meet futurePGM demand, without causing unnecessaryinstability or volatility by underestimatingcustomers’ requirements. Conversely, shouldmarkets reach an oversupply situation, AngloPlatinum will not throttle back its expansions foras long as there are more expensive producingrivals on the supply side. To do so would, firstly,be uncompetitive and detrimental to consumersand, secondly, provide a price umbrellato operations that are too costly to deserveto survive. While short-term volatility can resultin temporary surpluses and deficits of PGMproduction, Anglo Platinum is driven by thelong-term needs of PGM consumers. Its planninghorizon can be several business cycles hence as itdecides to build projects that will secure aproduction base well into the future.beyond this time may be possible, requiringexpansion post 2006 would be limited, althoughAnglo Platinum will expand its productionfurther expansion in mine production.under the “best estimate scenario”, expansionthrough the establishment of both brownfields10