MARKETS ANDBUSINESS

Platinum group metals: the new gold

Whereas gold reserves in South Africaare decreasing and mining it hasbecome more difficult, sales of platinumgroup metals, including palladium andrhodium, are now double those of gold.The metals, which are refined andsmelted in the country, account for 15%of South African exports. Usage ofplatinum in jewellery accounts for just22% of demand compared with 45% in1999. However, demand in theautomotive industry for emission-reduction catalysts is increasing. Theprice of platinum is expected to rise toover $1300/ounce, helped by thelaunch of bullion exchange-trade funds(ETFs) in the finance sector. Palladium,a cheaper metal, is being increasinglyused in petrol vehicles, but platinumremains the only choice for dieselvehicles. Europe is the largestconsumer of platinum since about 50%of new vehicles run on diesel. Theintroduction of ETFs has led toincreased platinum demand, resultingin increased mining investment,especially in South Africa which has80% of global platinum reserves.

Economist, 12 May 2007, 383 (8528), 82-83

Platinum continues irresistible rise

According to Johnson Matthey, theworld surplus of platinum will increasein 2007. A graph gives platinum priceson the London market 3 Jan 2006-14May 2007. Platinum has increased to$1329/ounce. A table gives platinumsupply and demand by application for2005-2006. In 2006, production was6785 M ounces. It exceeded demand(210 tonnes) by only 10,000 ounces(310 kilos). However, S African minesare expected to increase mineraloutput by 15%, compensating for afall in Russian exports. Platinum useby the automotive sector has risen by11% to 4.2 M ounces with two-thirdsfor catalytic converters.

La Tribune, 15 May 2007, (3663), 20 (in French)

Used cars provide source of palladium

The increased scarcity and risingprices for platinum and palladium has

led to more interest in the recycling ofthese metals from used cars (mainlyfrom catalytic converters). The priceof palladium and platinum ingots hasincreased 10% since Jan 2007.According to GFMS, platinumrecycling has risen by two-thirds overa 7 year period to 27 tonnes in 2006.This represented a tenth of worldsupplies and the third largest source,ahead of the mining group Norilsk.Palladium recycling jumped by 20% in2006 to a record 24 tonnes. This wasalso a tenth of world supply and waslarger than the output of the S Africanfirm Impala. In Europe, palladiumrecycling increased by 25%. GFMSexpects similar growth to continue until2011. With increased production from SAfrican mines, there may not besufficient demand to absorb therecycled material. The impact ofrecycling will be much later forplatinum. European platinum recyclingincreased by only 10% in 2006.

La Tribune, 2 May 2007, (3655), 17 (in French)

COMPANYNEWS

Albemarle reports 1Q 2007 results

Albemarle Corp reported net incomeof $58.1 M for 1Q ended Mar 2007(net income of $34.4 M in 1Q 2006),due to strong performance in each ofthe company’s three businesssegments. The company reported netsales totalling $589 M for 1Q 2007($607 M in 1Q 2006). Catalystsrecorded net sales of $235.8 for 1Q2007. Catalysts segment income for1Q 2007 increased 56% to $39.4 Mduring 1Q 2007 due to higher pricingand increased FCC refinery catalystsand polyolefin catalysts volumes,partially offset by increased rawmaterial costs.

Albemarle 1Q 2007 results, 23 Apr 2007 (AlbemarleCorp, 330, South Fourth Street, PO Box 1335,Richmond, VA 23210, USA. Tel: +1 804 788 6000.Fax: +1 804 388 7686. Website:http://www.albemarle.com)

Aquarius Platinum

Platinum has a distinctive place incommodities as a precious metalwhose primary market is industrial.Whereas the price of base metals hasbeen driven by Chinese demand, the

platinum market has been driven byregulatory changes in the motor carindustry. Almost 75% of the world’splatinum is used in catalyticconverters, and supply has beensqueezed so much that the jewellerymarket has been reduced. Third-quarter production numbers fromAquarius, issued late in Apr 2007,were a slight disappointment, showinga fall of 9% against the previousquarter. However, with operationsexclusively in South Africa, Aquariushas benefited from being one of thelowest cost platinum producers. Wageand capital goods inflation is certainlya cause for concern but with demandfor platinum is unlikely to be matchedby supply in the near term thechances of a sharp correction areslim. Aquarius is well positioned in therhodium market. There is a globalshortage of rhodium which is currentlytrading at $6000/ounce, nearly 10times the price of gold.

The Independent, 4 May 2007 (Website:http://www.independent.co.uk)

Firms surf the wave of recovery: BASF

BASF has emerged as the leadingplayer in the fine and specialitychemicals market, demonstratinganother stellar performance in 2006.The company recorded a 23.1% year-on-year growth in sales to €52,610 M,while EBITDA increased 18.1% to€9723 M. Net income rose 6.9% to€3215 M. An estimated €4.2 bn wasadded to sales with the acquisition ofJohnson Polymer, Engelhard, andDegussa Construction Chemicals,which are expected to be completelyintegrated by mid-2007. The strongestbusiness segment of BASF in 2006was Chemicals, comprisingIntermediates, Catalysts, Inorganics,and Petrochemicals, although thedivision’s 43% sales growth was largelyattributed to the Engelhard acquisition.

Speciality Chemicals, Apr 2007, 27 (3), 12

BASF Japan merges former Engelhardunits

BASF Japan will be running theoperations of Engelhard Japan andEngelhard Asia Pacific, formerJapanese units of Engelhard Corp,particularly their activities on skincareproducts’ ingredients, speciality films,sparkling pigments, and kaolin.

2 JULY 2007

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