24 november 2016 david jollie, market analysis...

OVERVIEW OF PGM MARKETS24 NOVEMBER 2016David Jollie, Market Analysis Manager

PLATINUM

Miss South Africa Platinum Crown 2013 - 2015

2

CAUTIONARY STATEMENT

This presentation has been prepared by Anglo American Platinum Limited (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree to be bound by the following conditions.This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American Platinum. Further, it does not constitute a recommendation by any of the Anglo American group of companies (“Anglo American”) or any other party to sell or buy shares in Anglo American Platinum or any other securities. All written or oral forward‐looking statements attributable to Anglo American Platinum or persons acting on their behalf are qualified in their entirety by these cautionary statements.The views expressed here contain information derived from publicly available or third party sources that have not been independently verified.Forward‐Looking StatementsThis presentation includes forward‐looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Anglo American’s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American’s products, production forecasts and reserve and resource positions), are forward‐looking statements. Such forward‐looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements.

Such forward‐looking statements are based on numerous assumptions regarding Anglo American’s present and future business strategies and the environment in which Anglo American Platinum will operate in the future. Important factors that could cause Anglo American’s actual results, performance or achievements to differ materially from those in the forward‐looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American Platinum operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American’s most recent Annual Report. Forward‐looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward‐looking statements. These forward‐looking statements speak only as of the date of this presentation. Anglo American Platinum expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the “Takeover Code”), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to

any forward‐looking statement contained herein to reflect any change in Anglo American’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American Platinum will necessarily match or exceed its historical published earnings per share.Certain statistical and other information about Anglo American Platinum included in this presentation is sourced from publicly available third party sources. As such it presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American.

No Investment AdviceThis presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. It is important that you view this presentation in its entirety. If you are in any doubt in relation to these matters, you should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or other independent financial adviser (where applicable, as authorised under the Financial Services and Markets Act 2000 in the UK, or in South Africa, under the Financial Advisory and Intermediary Services Act 37 of 2002.).

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Primary supply

Secondary supply

Platinum jewellery

Demand stimulation

1

2

5

6

7 A few thoughts on pricing

3The automotive sector – opportunity or challenge4

Current demand

8 Questions

OVERVIEW

4

Mogalakwena mine

Norilsk

Auto catalyst recycling

Jewellery recycling

WHERE DO THE PLATINUM GROUP METALS COME FROM?

1 Primary supply

5Source: SFA (Oxford)

A declining supply picture emerges at the end of the decade

GLOBAL PLATINUM GROUP METAL SUPPLY

1 Primary supply

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2025202220212020 202420232015 2018 201920172016

Global platinum supply 2015-2025 (000 oz)

CAGR 2015 – 2025: 0.1%

Other miningRecycling South Africa

6

Source: SNL

THE PRIMARY CASH COST CURVE2016 cash costs

Spot price, 16 Nov

1 Primary supply

7

Source: Venmyn Deloitte

WHAT WILL HAPPEN TO PRIMARY SUPPLY?South African production and capex

Refined platinum production versus capital expenditure (2015 money terms)

1 Primary supply

8

WHAT COULD SUPPLY LOOK LIKE?Bring on new supply is challenging

1 Primary supply

Source: Johnson Matthey

9Source: Anglo American Platinum

MODEST GROWTH IN RECYCLING OF PLATINUM FORECAST

2 y2 Secondary supply

10

WHY DO PEOPLE BUY THE PLATINUM GROUP METALS?

Images: Platinum guild international; Johnson Matthey

3 Current demand

11

Source: SFA (Oxford)

GLOBAL PLATINUM DEMAND BY SECTOR

CAGR 2015 – 2025: 1.0%

3 Current demand

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2021 2024 20252018 2020 2022 202320192015 20172016

Global platinum demand 2015-2025 (000 oz)

JewelleryOther Automotive

12Source: SFA (Oxford)

GLOBAL PALLADIUM DEMAND BY SECTOR

CAGR 2015 – 2025: 1.1%

3 Current demand

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

2015 2016 2017 2025202420232021202020192018 2022

AutomotiveOther

Global palladium demand 2015-2025 (000 oz)

13Source: LMC Automotive, Anglo American Platinum

THE AUTOMOTIVE SECTOR

CAGR 2015 – 2025: 2.9%

4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

110,000,000

120,000,000

2013 20232022 202520242021202020192014 201820162015 2017

DieselGasolineHybridsElectric

Annual light duty vehicle production

14Source: LMC Automotive

WHAT IS THE FUTURE FOR THE DIESEL ENGINE?


15Source: Platinum Metals Review/Johnson Matthey

% o

f max

imum

em

issi

ons

Euro

5/E

uro

6

HC HydrocarbonCO: Carbon monoxideNOX: Oxides of nitrogen

THRIFTING AND SUBSTITUTION


Limited risk, and some opportunity as emission standards tighten

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DEVELOPMENTS IN THE AUTOMOTIVE INDUSTRYA degree of scepticism should be applied regarding future technologies…


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0

20

40

60

80

100

120

140

0.00.51.01.52.02.53.03.54.0

Jul 0

8D

ec 0

8M

ay 0

9O

ct 0

9M

ar 1

0Au

g 10

Jan

11Ju

n 11

Nov

11

Apr 1

2Se

p 12

Feb

13Ju

l 13

Dec

13

May

14

Oct

14

Mar

15

Aug

15Ja

n 16

Hybrids and Oil Prices in the USA

Hybrid US Mkt Share (%, LHS)

WTI ($/barrel, RHS)

0%

2%

4%

6%

8%

10%

12%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

FHEV MHEV PHEV BEV EREV FCEV

Forecast EV Penetration Rates

Source: HybridCars.com, LMC, Bloomberg

THE FUTURE FOR HYBRIDS

FHEV: Full Hybrid Electric VehicleMHEV: Mild Hybrid Electric VehiclePHEV: Plug-in Hybrid Electric Vehicle

BEV: Battery Electric VehicleEREV: Electric Vehicle with Extended RangeFCEV: Fuel Cell Electric Vehicle


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ELECTRIC CARS – MYTH AND REALITY


Images: Tesla (top left); David Jollie (top right); Nissan (bottom)

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INTERNAL COMBUSTION ENGINE CARS WILL BECOME MORE EXPENSIVE BUT XEV PREMIUMS WILL DECLINE

Source: AutonomieHEV: Hybrid Electric VehiclePHEV: Plug-in Hybrid Electric VehicleBEV: Battery Electric VehicleFCEV: Fuel Cell Electric Vehicle


20Source: Johnson Matthey

POTENTIAL FOR JEWELLERY DEMAND - CHINA

5 Platinum jewellery5 Platinum jewellery

21

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2015H2

Number of Chow Tai Fook points-of-sale in greater China

Source: Chow Tai Fook

JEWELLERY DEMAND - RETAILERS


22Source: IMF, World Bank, Glaux Metal

0

100

200

300

400

500

600

70020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

1920

20

Growth in GDP components (bn USD)

Consumption

Investment

UNCERTAINTY IN JEWELLERY DEMAND: ECONOMIC GROWTH – CHINA


23

Source: Chinese Bureau of Statistics

UNCERTAINTY IN JEWELLERY DEMAND: DEMOGRAPHICS


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STIMULATING DEMAND – OUR STRATEGY

Three key focus areas for further

development

Grow investment demand via the World Platinum Investment Council (WPIC) which will promote Pt as an investment product

Investment demand1

Grow sustainable jewellery demand and reduce demand elasticity. e.g. by growing Pt purchases in the Chinese and Indian bridal segments via the industry funded Platinum Guild International (PGI)

Jewellery demand2

Grow industrial demand through supporting development of new PGM applications (specific focus on accelerating fuel cell adoption)

Industrial demand3

Nea

r Ter

mM

ed-lo

ng

term

6 Demand stimulation6 Demand stimulation

25Source: Johnson Matthey, Austrian Mint, Anglo American Platinum

DEMAND STIMULATION – INVESTMENT


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STIMULATING INDIAN JEWELLERY DEMANDFrom arranged marriages to true love


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OVERVIEW OF EXISTING MARKET DEVELOPMENT ACTIVITIES

Investmentmodel

Direct into universities/

research facilitiesDirect investment Equity investment

Indirect investment and/or advocacy programmes, leveraging

partners with similar interests

Example Projects

Leveraged / co-funded

FC Mining Equipment

FC Rural electrification

Research Early stagebusinesses

Maturebusinesses

Product development

FC Vehicle

FC Cofimvaba


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0

500

1,000

1,500

2,000

2,500

3,000

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

Number of patents referencing each metal

Pt

Pd

Rh

STIMULATING DEMAND - NEW APPLICATIONS

Source: Espacenet, Anglo American Platinum


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STIMULATING DEMAND - NEW APPLICATIONS FOR PLATINUM

Source: Espacenet, Anglo American Platinum


30Source: Bloomberg

PRICE PERFORMANCE IN 2016

7 A few thoughts on pricing

24 november 2016 david jollie, market analysis...

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