Platinum Palladium Survey 2011 Presentation

8/12/2019 Platinum Palladium Survey 2011 Presentation

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Platinum & Palladium SurveyPlatinum & Palladium Survey 20112011Launch PresentationLaunch Presentation 55thth May 2011May 2011

LondonLondon Philip KlapwijkPhilip Klapwijk

JohannesburgJohannesburg Paul WalkerPaul Walker


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GFMS gratefully acknowledges the generousGFMS gratefully acknowledges the generous

Platinum & Palladium SurveyPlatinum & Palladium Survey


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Platinum in 2010Platinum in 2010

Palladium in 2010Palladium in 2010


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Platinum Supply Rose 5% to 7.69m oz in 2010Platinum Supply Rose 5% to 7.69m oz in 2010

Mine output up by 2% to 4.75m oz, mainly South AfricaMine output up by 2% to 4.75m oz, mainly South Africa First time increase since 2007First time increase since 2007

a ns n an m a we excee e osses e sew erea ns n an m a we excee e osses e sew ere

Rising costs were offset by a considerable rise in platinum pricesRising costs were offset by a considerable rise in platinum prices

ewe ery recyc ng umpe o . m ozewe ery recyc ng umpe o . m oz Higher scrap from both Japan and ChinaHigher scrap from both Japan and China

Driven b risin rices and increasin ool of eweller stocks.Driven b risin rices and increasin ool of eweller stocks.

Autocatalyst recycling rebounded 15% to 0.90m ozAutocatalyst recycling rebounded 15% to 0.90m oz Ke drivers include stron PGM and steel rices and anKe drivers include stron PGM and steel rices and an

improvement in recycling efficiencyimprovement in recycling efficiency All markets saw higher scrap, with Europe posting the largest riseAll markets saw higher scrap, with Europe posting the largest rise


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Platinum Mine Production;Platinum Mine Production;

Implats

AquariusRoyal Bafokeng

Others

Norilsk

Stillwater

AmplatsLosers

Vale

Artel Amur

-100 -50 0 50 100 150Source: GFMSSource: GFMS ((Platinum & Palladium Survey 2011)Platinum & Palladium Survey 2011)

(000 ounces)(000 ounces)


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South African Mine Production CostsSouth African Mine Production Costs

R600,000R600,000

R400,000

,

R400,000

,

Average Pt price 2010

R300,000R300,000 Average Pt price (2009)

R100,000R100,000All-in costs per in 2010 ($1,469/oz))

Total cash costs per kilo in 2010 ($1,081/oz)

R0R0

0 10 20 30 40 50 60 70 80 90 100

Note: AllNote: All--in costs includes depreciation, sustaining capex, overheads, minein costs includes depreciation, sustaining capex, overheads, mine--site exploration & exceptionals such as retrenchmentsite exploration & exceptionals such as retrenchment

Source: GFMSSource: GFMS ((Platinum & Palladium Survey 2011)Platinum & Palladium Survey 2011)


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GlobalGlobal Platinum SupplyPlatinum Supply

1600

1800

8.0

9.0

1200

1400

6.0

7.0

800

1000

4.0

5.0US$/oz

illionoz

4002.0

.

00.0

.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

out r can m n ng t er m n ng

Autocatalyst recycling Old jewellery scrapSource: GFMSSource: GFMS ((Platinum & Palladium Survey 2011)Platinum & Palladium Survey 2011)


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HeadlineHeadline Su lSu l -- PlatinumPlatinum

6 0486 048 6 1866 186 138138

Autocatalyst RecyclingAutocatalyst Recycling 780780 898898 118118

ewe ery crapewe ery crap

Total supplyTotal supply 7,2917,291 7,6877,687 396396

--



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Platinum Demand in 2010Platinum Demand in 2010


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DemandDemand -- PlatinumPlatinum

000 oz000 oz 20092009 20102010 +(+(--))

utocata ystsutocata ysts ,, ,,

IndustrialIndustrial 1,2301,230 1,7501,750 520520

JewelleryJewellery 2,2922,292 1,8941,894 (398)(398)

Retail InvestmentRetail Investment 305305 7676 (229)(229)

TotalTotal 6,4156,415 6,7256,725 311311

Note: autocatalyst & jewellery are gross fabrication demand, others are netNote: autocatalyst & jewellery are gross fabrication demand, others are net



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Autocatalysts DemandAutocatalysts Demand inin 20102010 -- PlatinumPlatinum

Vehicle production up 23% and diesel rose 27%Vehicle production up 23% and diesel rose 27%

Platinum use up 16% to 3.0m oz after a hefty decline inPlatinum use up 16% to 3.0m oz after a hefty decline in

2009, but still 26% below the peak in 20072009, but still 26% below the peak in 2007

urope pos e e arges ncrease n vo ume erms,urope pos e e arges ncrease n vo ume erms,

helped by Euro 5 and a rebound in LV productionhelped by Euro 5 and a rebound in LV production

Higher demand also due to tight standards & higherHigher demand also due to tight standards & higher

But gains were limited by ongoing substitution lossesBut gains were limited by ongoing substitution losses

both in gasoline & dieselboth in gasoline & diesel


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GlobalGlobal Vehicle ProductionVehicle Production

,,

80

90

60

70

Other regions

China+120

40

50

on

units

North America

Europe+15

30mill

+66

+58

10 +160Labels show change in

platinum demand in

2010; up 419 koz

2006 2007 2008 2009 2010

Source:Source: GFMS, IHS AutomotiveGFMS, IHS Automotive


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Global Vehicle Production & PlatinumGlobal Vehicle Production & Platinum

se n u oca a ys sse n u oca a ys s

Production 77m units Platinum 3.0m oz

Light diesel Heavy diesel

Gasoline

Light diesel Heavy diesel

Gasoline

Note: basis 2010 dataNote: basis 2010 data



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GlobalGlobal Light Vehicle ProductionLight Vehicle Production -- DieselDiesel

18

20

1416

10

12

nunits Other regions

China

6

8milli apan

North America

2

4

0

2006 2007 2008 2009 2010Source:Source: IHS AutomotiveIHS Automotive


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GlobalGlobal Autocatalyst DemandAutocatalyst Demand -- PlatinumPlatinum

17.5

.

3.0

.

12.5

15.0

2.0

2.5 millio

z

10.01.5

onunitsm

illio

5.0

7.5

0.5

1.0

2.50.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Pt in gasoline Pt in diesel Light diesel production (rhs)



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Industrial ApplicationsIndustrial Applications PlatinumPlatinum

1.75m oz in 20101.75m oz in 2010 u 42%u 42%2.5

2.0

Glass1.5

illiono

Electronics

Petroleum

0.5

.Chemicals

Other

0.0

2001 2003 2005 2007 2009

ource: GFMSource: GFMS ((Platinum & Palladium Survey 2011)Platinum & Palladium Survey 2011)


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JewelleryJewellery DemandDemand inin 20102010 -- PlatinumPlatinum

.. All major markets, except North America, registered declineAll major markets, except North America, registered decline

China down 26% to 1.18m ozChina down 26% to 1.18m oz Rising prices and elevated stocks reduced fabrication demandRising prices and elevated stocks reduced fabrication demand

-- --

North America & EuropeNorth America & Europe totaltotal 0.42m oz (up 6%)0.42m oz (up 6%) O ta e n Nort Amer ca was te y a recovery n t e uxuryO ta e n Nort Amer ca was te y a recovery n t e uxury

end of the marketend of the market

European demand saw substitution losses into carat palladiumEuropean demand saw substitution losses into carat palladium

ewe ery on g er pr cesewe ery on g er pr ces

Fabrication in Ja an dro ed b 3% to 0.26m ozFabrication in Ja an dro ed b 3% to 0.26m oz After a rebound in 2009, longAfter a rebound in 2009, long--term downtrend resumedterm downtrend resumed

Chief drivers were weak economy and higher pricesChief drivers were weak economy and higher prices


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Platinum JewelleryPlatinum Jewellery Gross Fabrication DemandGross Fabrication Demand

$1,800

3.0

3.5

$1,200

,

2.5 Other

$900

1.5

2.0

illiono Europe

North America

$6001.0

Japan

China

$00.0

0.5 Pt US$ (rhs)

2001 2003 2005 2007 2009



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Su l &Su l & DemandDemand -- PlatinumPlatinum

000 oz000 oz 20092009 20102010

Headline SupplyHeadline Supply 7,2917,291 7,6877,687

Fabrication DemandFabrication Demand 6,4156,415 6,7256,725

Gross Sur lus DeficitGross Sur lus Deficit 876876 962962

We consider this the preferred measure of platinumsWe consider this the preferred measure of platinums

underlying fundamentals.underlying fundamentals.

Gross surplus implies an increase in aboveGross surplus implies an increase in above--ground stocks.ground stocks.



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Supply &Supply & DemandDemand -- PlatinumPlatinum

000 oz000 oz 20092009 20102010

876876 962962

Other Stock Activity:Other Stock Activity:

Industry DeIndustry De--stockingstocking 665665 00

Exchan e Traded Funds*Exchan e Traded Funds* 384384 550550

SubSub--totaltotal 281281 (550)(550)

Residual Surplus (Deficit)Residual Surplus (Deficit) 1,1571,157 412412

egat ve num ers or s n cate net a t ona nvestmentegat ve num ers or s n cate net a t ona nvestment



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World InvestmentWorld Investment Platinum*Platinum*

2000Net Value of WorldNet Value of World

1500

1000nces

1000

500

illionUS$

ou

sando

0

500

0

T

-500-500

*World Investment is the sum of retail investment, net growth in ETF and residual surplus (deficit)*World Investment is the sum of retail investment, net growth in ETF and residual surplus (deficit)

SourceSource: GFMS: GFMS ((Platinum & Palladium Survey 2011)Platinum & Palladium Survey 2011)


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PalladiumPalladium


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HighlightsHighlights of 2010of 2010 -- PalladiumPalladium

Mine production up by 5% in 2010, mainly South Africa.Mine production up by 5% in 2010, mainly South Africa.

o a supp y rose y , as recyc ng a so c m e .o a supp y rose y , as recyc ng a so c m e .

Total demand was up by over 1.0m oz.Total demand was up by over 1.0m oz.

Demand from autocatalysts reached a 10Demand from autocatalysts reached a 10--year high.year high.

Gross deficit was 0.55m oz, versus near balance in 2009.Gross deficit was 0.55m oz, versus near balance in 2009.

. ,. ,ETF gains.ETF gains.

r ces r ven y nves men an ro us au oca a ys sr ces r ven y nves men an ro us au oca a ys s

demand.demand.


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Palladium Supply in 2010 Rose to 8.07m ozPalladium Supply in 2010 Rose to 8.07m oz

Mine production up 5%, after 3 years of lossesMine production up 5%, after 3 years of losses Output increased in South Africa, Canada and RussiaOutput increased in South Africa, Canada and Russia

In contrast, the United States posted a slight fallIn contrast, the United States posted a slight fall

Autocatalyst recycling increased by 21% to 1.29m ozAutocatalyst recycling increased by 21% to 1.29m oz

More than reversed the decline seen in 2009More than reversed the decline seen in 2009 Strong PGM prices and improved recycling efficiency wereStrong PGM prices and improved recycling efficiency were

behind the risebehind the rise

Old jewellery scrap surged by 40% to 163,000 ouncesOld jewellery scrap surged by 40% to 163,000 ounces The majority came from retailers inventories in the ChineseThe majority came from retailers inventories in the Chinese

mar et, w ere con ence n pa a um ewe ery su eremar et, w ere con ence n pa a um ewe ery su ere


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Palladium Demand in 2010Palladium Demand in 2010


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DemandDemand -- PalladiumPalladium

000 oz000 oz 20092009 20102010 +(+(--))

,, ,, ,,

IndustrialIndustrial 2,2832,283 2,5132,513 229229

ewe eryewe ery ,,

Retail InvestmentRetail Investment170170 7575 (95)(95)

TotalTotal 7,5917,591 8,6188,618 1,0281,028

Note: autocatalyst & jewellery are gross fabrication demand, others are netNote: autocatalyst & jewellery are gross fabrication demand, others are net



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Autocatal st inAutocatal st in 20102010 -- PalladiumPalladium Dominated by global gasoline vehicle production.Dominated by global gasoline vehicle production.

Gasoline vehicle output grew by 23% globally, withGasoline vehicle output grew by 23% globally, with..

Palladium demand surged 30% to 5.2m oz.Palladium demand surged 30% to 5.2m oz.

Substitution gains in diesel & gasoline, due toSubstitution gains in diesel & gasoline, due to

pa a um s cos a van age over p a num, an a ma orpa a um s cos a van age over p a num, an a ma orrecovery in car production.recovery in car production.


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GlobalGlobal Light Gasoline ProductionLight Gasoline Production up 23%up 23%Developed markets rise 21%, emerging markets up 25%Developed markets rise 21%, emerging markets up 25%

60

40

Other regions

China

+144

30

onunits apan

North America

Euro e

+233

20mill

+337

+147

10+334 Labels show change in

palladium demand in

2006 2007 2008 2009 2010

; up . m oz



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Industrial ApplicationsIndustrial Applications PalladiumPalladium3.0

2.0

.

1.5

illionoz er

Electronics

1.0Chemical

Dental

0.0

.

2001 2003 2005 2007 2009



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Jewellery inJewellery in 20102010 -- PalladiumPalladium

Global jewellery demand fell by 27% to 809,000 ozGlobal jewellery demand fell by 27% to 809,000 oz The fall in Chinese fabrication dominated the global declines; ifThe fall in Chinese fabrication dominated the global declines; if

China is excluded, the drop was limited to 7%China is excluded, the drop was limited to 7%

Chinese offtake slum ed b 40% to a seven ear lowChinese offtake slum ed b 40% to a seven ear low Loss of confidence in palladium by the trade, despite high marginsLoss of confidence in palladium by the trade, despite high margins

Handicapped by lack of marketing of the metal, no SGE tradingHandicapped by lack of marketing of the metal, no SGE tradingw c as e o a ac o pr ce ransparency,w c as e o a ac o pr ce ransparency,

Demand elsewhere also falteredDemand elsewhere also faltered

US demand weakened by 7%, due partly to the shift to silver andUS demand weakened by 7%, due partly to the shift to silver andnonnon--precious metals jewelleryprecious metals jewellery

In contrast, European demand for carat palladium jewellery roseIn contrast, European demand for carat palladium jewellery rose


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Su l &Su l & DemandDemand -- PalladiumPalladium

Headline SupplyHeadline Supply 7,5047,504 8,0678,067

Fabrication DemandFabrication Demand 7,5917,591 8,6188,618

We consider this the preferred measure of palladiumsWe consider this the preferred measure of palladiums

underlying fundamentals.underlying fundamentals.

ross e c mp es a re uc on n a oveross e c mp es a re uc on n a ove--groun s oc s.groun s oc s.



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Supply &Supply & DemandDemand -- PalladiumPalladium

000 oz000 oz 20092009 20102010

Russian State SalesRussian State Sales 1,1001,100 800800

xc ange ra e un sxc ange ra e un s ,,

SubSub--totaltotal 593593 (233)(233)

Residual Surplus (Deficit)Residual Surplus (Deficit) 507507 (784)(784)

* Negative numbers for ETFs indicate net additional investment* Negative numbers for ETFs indicate net additional investment



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World Investment*World Investment* -- PalladiumPalladium7002500

600

2000

400

500

1500Milu

nces Net Value of WorldNet Value of World

InvestmentInvestment

3001000

lionUS

$h

ousand

100

200

500

00

2005 2006 2007 2008 2009 2010

*World Investment is the sum of retail investment, net growth in ETF and residual surplus (deficit)*World Investment is the sum of retail investment, net growth in ETF and residual surplus (deficit)

SourceSource: GFMS: GFMS ((Platinum & Palladium Survey 2011)Platinum & Palladium Survey 2011)


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PlatinumPlatinum Outlook for 2011Outlook for 2011

Pl iPl i O l k f 2011O l k f 2011


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PlatinumPlatinum Outlook for 2011Outlook for 2011

South Africa & Russia expected to stabiliseSouth Africa & Russia expected to stabiliseNorth America to gain stronglyNorth America to gain strongly Old jewellery scrap also likely to rise in response to pricesOld jewellery scrap also likely to rise in response to prices

Demand to edge higher, but remain below preDemand to edge higher, but remain below pre--crisis levelcrisis level Substitution & thrifting to hamper rate of increaseSubstitution & thrifting to hamper rate of increase Industrial demand to grow modestlyIndustrial demand to grow modestly Jewellery offtake to be curbed by higher prices & stocksJewellery offtake to be curbed by higher prices & stocks

Gross surplus to recur in 2011Gross surplus to recur in 2011 likely to be up on 2010likely to be up on 2010 Price sensitive jewellery demand may also sufferPrice sensitive jewellery demand may also suffer

Nonetheless, support from investors seems set to continueNonetheless, support from investors seems set to continue ow n eres ra es, currency ears, worr es over g n a onow n eres ra es, currency ears, worr es over g n a on Although the global economic recovery remains fragileAlthough the global economic recovery remains fragile


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Platinum ExposurePlatinum Exposure ETFs & Nymex FuturesETFs & Nymex Futures

2 000

$2,500

3.0

3.5

$1,5002.0

2.5

z

$1,0001.5

m

illion

$5000.5

.

$00.0Apr-07 Jan-08 Oct-08 Jul-09 Apr-10 Jan-11

Other ETF Nymex net long Price (rhs)

Source:Source: GFMS, CFTC, respective ETF issuersGFMS, CFTC, respective ETF issuers


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PlatinumPlatinum ForecastForecast TTrading Rangerading Range toto EndEnd--20112011

-- ,, $2,500

$2,000$1,925$1,925

$1,500 $1,675$1,675

$1,000

$500

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

London 2nd fix forecast low forecast high

Source:Source: GFMS, Thomson ReutersGFMS, Thomson Reuters


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PalladiumPalladium Outlook for 2011Outlook for 2011

P ll diP ll di O tl k f 2011O tl k f 2011


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PalladiumPalladium Outlook for 2011Outlook for 2011

. . .. Subdued gain in mine production, mostly from North AmericaSubdued gain in mine production, mostly from North America

Sharp rise in autocatalyst scrap, reaching almost 20% of total supplySharp rise in autocatalyst scrap, reaching almost 20% of total supply

Demand growth to broadly match increase in supplyDemand growth to broadly match increase in supply Autocatalyst to rise on higher vehicle production (gasoline)Autocatalyst to rise on higher vehicle production (gasoline) Ga ns rom US may e strong ut e y to e wea n EuropeGa ns rom US may e strong ut e y to e wea n Europe

Effects of disaster in Japan may be considerable, home & abroadEffects of disaster in Japan may be considerable, home & abroad

Growth in China ma slow down si nificantlGrowth in China ma slow down si nificantl Jewellery & retail investmentJewellery & retail investment both likely to declineboth likely to decline

Gross deficit to remain high, similar level to 2010Gross deficit to remain high, similar level to 2010

RussianRussian stock salesstock sales to stay broadly flat, around 0.8m oz.to stay broadly flat, around 0.8m oz. Sentiment towards palladium to remain positiveSentiment towards palladium to remain positive

ETFs have climbed strongly so far this year.ETFs have climbed strongly so far this year.


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Palladium ExposurePalladium Exposure ETFs & Nymex FuturesETFs & Nymex Futures

$800

$900

3.5

4.0

$500

$6002.5

3.0

z

$300

$400

1.5

2.0

m

illion

$100

$200

0.5

1.0

$00.0

Apr-07 Jan-08 Oct-08 Jul-09 Apr-10 Jan-11

on on ew or u us aer

Other ETF Nymex net long Price (rhs)

Source:Source: GFMS, CFTC, respective ETF issuersGFMS, CFTC, respective ETF issuers

P ll diP ll di FF TT di Rdi R E dE d 20112011


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PalladiumPalladium ForecastForecast TTrading Rangerading Range toto EndEnd--20112011

-- $1,000

London 2nd fix forecast low forecast hi h

$800

$600$650$650

$200

$0

- - - - - - -

Source:Source: GFMS, Thomson ReutersGFMS, Thomson Reuters


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Documents

Platinum Palladium Survey 2011 Presentation