Financial highlights
US$ million (unless otherwise stated)
2010 2009
Operating profit 837 32
EBITDA 1,624 677
Net operating assets 13,478 12,141
Capital expenditure 1,011 1,150
Share of Group operating profit 9% 1%
Share of Group net operating assets 31% 31%
Safety inspection at Rustenburg Platinum Mines' acid plant

Safety inspection at Rustenburg Platinum Mines' acid plant.

Group strategy actions

Investing – in world class assets in the most attractive commodities

In 2011, we plan to spend up to $1.16 billion on capital expenditure. Notably, all previously deferred projects have been reviewed and are now incorporated into our growth for value strategy.

Organising – efficiently and effectively

Against a background of rising input costs across the mining sector, we were able to control cash operating cost growth below inflation due to contributions from our asset optimisation and procurement programmes, as well as further productivity improvements.

Operating – safely, sustainably and responsibly

Our overall safety record continued to improve in 2010, reflecting a 43% year on year decline in fatal injuries and a 15% improvement in Platinum’s LTIFR, a record for the business.

Employing – the best people

During the year we improved our productivity to 7.06 m2 per total operating employee versus 6.33 m2 in 2009, while progressively aligning our overall headcount with our long term growth profile requirements.

Business overview

Our Platinum business, based in South Africa, is the world’s leading primary producer of platinum, accounting for around 40% of global output. Platinum mines, processes and refines the entire range of platinum group metals (PGMs): platinum, palladium, rhodium, ruthenium, iridium and osmium. Base metals such as nickel, copper and cobalt sulphate are important secondary products and are significant contributors to earnings.

Platinum’s operations exploit the world’s richest reserve of PGMs, known as the Bushveld Complex, which contains PGM-bearing Merensky, UG2 and Platreef ores. The company’s access to an excellent portfolio of ore reserves ensures it is well placed to be the world’s major platinum producer for many years to come.

Platinum wholly owns 10 mining operations currently in production, a tailings re-treatment facility, three smelters, a base metals refinery and a precious metals refinery. Each mine operates its own concentrator facilities, with smelting and refining of the output being undertaken at Rustenburg Platinum Mines’ (RPM) metallurgical facilities.

Platinum’s 100% owned mining operations now consist of the five mines at Rustenburg Section – Khomanani, Bathopele, Siphumelele, Thembelani and Khuseleka; Amandelbult Section’s two mines, Tumela and Dishaba; as well as Mogalakwena and Twickenham mines and the new Unki mine in Zimbabwe. Union Mine is 85% held, with a black economic empowerment (BEE) partner, the Bakgatla-Ba-Kgafela traditional community, holding the remainder.

Platinum also has 50:50 joint ventures with a BEE consortium, led by African Rainbow Minerals, at Modikwa platinum mine; and with XK Platinum Partnership in respect of the Mototolo mine. In addition, Platinum has 50:50 pooling and sharing agreements with Aquarius Platinum covering the shallow reserves of the Kroondal and Marikana mines and portions of the reserves at Thembelani and Khuseleka. Platinum is in partnership with Royal Bafokeng Resources, and has a 33% shareholding in the combined Bafokeng-Rasimone platinum mine (BRPM) and Styldrift properties.

During 2010, the listing of Royal Bafokeng Platinum (RB Plat) was completed successfully. Platinum, through RPM, holds 12.6% of RB Plats’ issued share capital. The listing was a landmark transaction marking the fulfilment of Platinum’s commitment towards facilitating the creation of an independently controlled and managed, black-empowered PGM producer.

Gross platinum demand

Operating profit
(2009: $32 m)


share of group operating profit
(2009: 1%)


(2009: $677 m)


Industry overview

PGMs have a wide range of industrial and high technology applications. Demand for platinum is driven primarily by its use in autocatalysts to control emissions from both gasoline and diesel engine vehicles, and in jewellery. These uses are responsible for 70% of total net platinum consumption. Platinum, however, also has a large range of other applications, predominantly in the chemical, electrical, medical, glass and petroleum industries.

The platinum jewellery market requires constant promotion and development. Platinum is the major funder and supporter of the Platinum Guild International (PGI), which plays a key role in encouraging demand for platinum and in establishing new platinum jewellery markets. Since 2000, China has been the leading platinum jewellery market, followed by Europe, Japan and North America.

Industrial applications for platinum are driven by technology and, especially in the case of autocatalysts, by legislation. With the rapid spread of exhaust emissions legislation, more than 94% of new vehicles now have autocatalysts fitted. The intensifying stringency of emissions legislation will drive growth in PGM demand.

Palladium’s principal application, accounting for about 45% of demand, is in autocatalysts. The metal is also used in electronic components, dental alloys and, more recently, has become an emerging jewellery metal in markets such as China. Palladium demand is expected to continue to increase in 2011, particularly given the volume of gasoline vehicles produced by emerging market countries such as China, India and Brazil.

Rhodium is an important metal in autocatalytic activity, which accounts for nearly 80% of net demand. Increased stocks of rhodium in the autocatalyst sector, coupled with increased supplies from South Africa, are likely to keep the market in surplus in the short to medium term.

Strategy and growth

Our objective is to maintain Platinum’s position as the leading primary producer of platinum. We are doing so in two principal ways: first, through managing costs as a priority, by improving productivity, increasing efficiency and through the effective management of supply chain and procurement costs; secondly, through continuing to develop the market for PGMs and to expand production into that growth opportunity.

We expect the cost improvement trend achieved since 2008 at Platinum to be sustained during 2011, with unit cash costs per equivalent refined platinum ounce kept at around R11,700, the same level as in 2010. Productivity is expected to increase from 7.06 m2 to an average of 7.3 m2 for 2011.

Platinum’s strategic plan, based on our current view that the market will be adequately supplied, should improve the company’s cost position, taking it from the upper half to the lower half of the cost curve. Platinum is steadily improving the reliability of its production capability and entrenching cost management throughout the business as a long term and sustainable culture. This will help ensure that Platinum is well positioned to extract optimal value from its assets as the market recovery continues. At the same time, there will continue to be an unremitting focus on safety as the company pursues its zero harm objective.

Project capital spend is now directly related to our long term ounce requirements. This has led to a reduction in the rate of spend, and all previously deferred projects have been reviewed and are now incorporated into our growth for value strategy. Platinum aims to spend R8 billion ($1.16 billion) of capital, excluding capitalised interest.

Platinum is involved in developing mining activity for PGMs on the Great Dyke of Zimbabwe, the second largest repository of platinum after the Bushveld Complex. Unki mine was commissioned in 2010, and will ramp up to design capacity in 2013. We are focusing exploration work in Zimbabwe on new projects in the Great Dyke as well as establishing extensions to the Unki resource base for potential future projects.

Financial overview

Platinum recorded an operating profit of $837 million, a significant increase, due to higher metal prices and successful cost control programmes, partly offset by a stronger rand and lower sales volumes, resulting from a shipment delay caused by the weather in Europe in late December 2010. Refined metal also became available after the last shipping date of the year, whereas 2009 sales volumes benefited from higher than usual stock levels at the beginning of the year.


The average dollar price achieved for platinum was $1,611 per ounce for the year, a 34% increase compared with $1,199 in 2009. The average prices achieved for palladium and rhodium sales for the year were $507 per ounce (2009: $257) and $2,424 per ounce (2009: $1,509) respectively. The average price achieved on nickel sales was $9.70 per pound (2009: $6.54). The overall basket price achieved for the year of $2,491 per platinum ounce sold compared with $1,715 achieved in 2009.

The PGM markets had a strong year in 2010, with significant recovery in demand from the autocatalyst and industrial markets, healthy demand from the jewellery sector and increasing investor interest in the platinum and palladium markets, primarily via Exchange Traded Funds (ETFs). Supply increases from the industry were largely delivered and, as a result, the platinum and palladium markets remained essentially in balance. The rhodium market saw a reduced surplus due to improved autocatalyst demand.

Platinum continued its commitment to the development of the PGM markets, working with industry partners and stakeholders in the maintenance of existing, and the development of new, industrial applications for the metals, while also maintaining the health of the jewellery markets.


Demand for platinum in autocatalysts had another year of solid recovery in 2010, as global production and sales of vehicles increased from lows of 59 million and 66 million vehicles in 2009 to reach 73 million and 71 million respectively. In particular, vehicle sales in the BRIC countries saw strong growth year on year, with Chinese production of light duty vehicles surpassing that of the traditionally largest market, the US, at close to 16 million. In Europe, the diesel proportion of sales rebounded to 50% in 2010 after declining to 47% in 2009, driven mainly by increased fleet sales. US vehicle inventories returned to historical averages in 2010 and reached 67 days in December 2010, compared with an average of 62 days in 2009 and a high of 118 days in February 2008.


Demand from the industrial sector continued to recover from 2009 lows, with capacity utilisation rates in the chemical and petroleum sectors having improved and all major indices seeing significant recovery. New capacity build in the glass sector contributed strongly to this recovery.


Despite the increase in the platinum price over the year, the jewellery market remained resilient and achieved approximately 1.5 million ounces of new metal demand in 2010. This represents a 40% decline compared with the record demand seen in 2009 when inventory rebuilding took place.


2010 started with strong investor inflows into the platinum and palladium ETFs, particularly into the new ETFs launched in the US. By the end of the year, the aggregate holdings in the platinum ETFs were a record 1.23 million ounces, with a record 2.21 million ounces being held across the palladium ETFs. The investment sector is now firmly established as a key source of demand for PGMs, making up 10% and 15% of platinum and palladium 2010 demand respectively.

Operating performance

Platinum performed strongly in 2010, achieving its goals of further improving its safety record, producing more than 2.5 million ounces of refined platinum, controlling cash operating cost growth below inflation, increasing employee productivity to more than 7 m2 per month per operating employee, strengthening its balance sheet via a successful R12.5 billion ($1.6 billion) rights issue and spending capital of $1 billion. The focus on and delivery of targets across all of these areas resulted in the resumption of dividend payments and contributed to Platinum’s ultimate operating strategy of delivering ‘Safe, Profitable Platinum’.


Platinum’s LTIFR of 1.17 for 2010 improved by 14.6% and was a record for the business. Consistent improvement is being seen in many parts of the business – many of Platinum’s mines operated for over 3.5 million shifts without a fatality and the number of injury free operations continues to increase. Sadly, eight employees lost their lives at Platinum’s managed operations during the year.


Refined platinum production increased by 5% to 2.57 million ounces, exceeding the company’s target of 2.5 million ounces. Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) from the mines managed by Platinum and its joint venture partners was 2.48 million ounces, an increase of 0.8% compared with 2009. Sales of refined platinum for the year were 2.52 million ounces, compared with 2.57 million ounces in 2009.


Costs continued to be managed tightly, with cash operating costs per equivalent refined platinum ounce of R11,730 ($1,603), an increase of 4.4%, or flat in real terms. Cost increases were curbed primarily through a 12% increase in productivity to 7.06m2 per month per operating employee, exceeding the target of 7m2. This was offset by a decline in grades of 3% to a 4E built-up head grade of 3.23 g/t, an average rise in wages of 8.7% and an increase in electricity tariffs of 26.4%.

Overall headcount was reduced to 54,022 at the end of the year, from 58,320 at the end of 2009.


Capital expenditure amounted to $1,011 million, a 12% decrease, with $511 million spent on projects and $500 million on stay-in-business capital.

The concentrator at the Unki project in Zimbabwe was formally commissioned during the fourth quarter of 2010. First production of refined metal from the mine is expected during the first quarter of 2011. At full capacity, Unki will supply 70 kozpa of refined platinum, a run rate expected to be reached in 2013.

The Mogalakwena North project reached steady state during the third quarter of 2010 (annual steady state 2011) and through optimisation projects will continuously produce 600 ktpm of ore.

Dishaba East Upper project implementation commenced in 2007 and is on schedule to reach steady state production of 100,000 platinum ounces per annum by 2012.


2011 is expected to be a strong year for Platinum, building on the momentum established in improving the safety of all employees, and increasing production to 2.6 million ounces of refined and equivalent refined platinum to meet expected solid demand. Costs will continue to be closely managed in order to keep them around 2010 levels, delivering further productivity improvements, and investing $1.16 billion of capital to ensure the company’s future production growth profile.

The platinum market is expected to remain in balance in 2011 due to continued strength from autocatalyst and industrial demand, resilient jewellery markets and continued investor interest. An increase in supply levels is also expected. In such an environment, the platinum price is expected to average at least $1,800 per ounce. Palladium’s price strength is expected to continue as that market moves further into deficit due to the strength of autocatalyst and investor demand and a reduction in supplies to the market.

Light vehicle sales in 2011 are expected to increase to 75 million, underpinning further demand for PGMs for autocatalysts, particularly in China and India.

At expected higher platinum prices, demand for jewellery is expected to plateau in 2011, but new sources of demand, such as the Indian market, are being pursued and should start to add to demand in the medium term. Industrial demand for PGMs should increase further in the year due to strong consumer demand for end products.

Price of platinum group metals (2009 to 2010)

Neville Nicolau
CEO Anglo Platinum Limited

Neville Nicolau

World's primary producer of platinum


Wholly owned mining operations


Platinum ounces production target
for 2011