Anglo American Annual Report 2012

01 At Mogalakwena North,maintenance work takesplace on a spare grizzlyunit, which forms part ofthe mine’s secondarycrusher circuit. Keepinga complete spare unit inworking order cuts downtimeto a minimum when theoriginal grizzly has to go infor maintenance.FINANCIAL ANDOPERATIONAL OVERVIEWPlatinum recorded an underlyingoperating loss of $120 million in2012, compared with $890 millionunderlying operating profit in 2011.This was primarily due to lowersales volumes, the impact of highermining inflation on costs and loweraverage realised prices. Platinumsales volumes for the period werelower owing to the two month illegalindustrial action experienced atmost of the mining operations in thefourth quarter. This was compensatedin part by a weaker average randagainst the dollar and a positivestock adjustment of $172 million.Cash operating costs perequivalent refined platinum ounceincreased by 21% to ZAR16,364(2011: ZAR13,552), primarily due tothe impact of the strike and increasesin the costs of labour, electricity,diesel and key inputs of processingoperations. Productivity decreasedby 4% to 6.05m 2 (2011: 6.32m 2 ).Refined platinum productionand sales decreased by 6% and17% respectively.Safety and environmentSeven employees lost their lives duringthe period and Platinum extends itssincere condolences to their families,friends and colleagues. The causes ofthe loss of life included falls of groundand transport related incidents. Thecompany’s safety performance hasimproved since 2007, and the fatalinjury and lost-time injury frequencyrates have come down by 54% and44% respectively.The proactive management of safetyrisks resulted in a decrease in thenumber of safety stoppages duringthe year. In 2012, there were 52 safetystoppages in Platinum’s operations,compared with 81 in 2011. Since thesafety stoppages were contained tothe areas where deviations wereobserved, the impact on productionwas considerably reduced in 2012.MarketsGross platinum demand declinedby 140,000 ounces, or 2%, in2012, as a result of weaker demandfor autocatalyst and industrialapplications more than offsettingincreases in jewellery demand initiatedby lower platinum pricing. Primarysupply of platinum was negativelyaffected by labour stoppages and mineclosures in South Africa. In addition,autocatalyst recycling decreased by16% in the year, in response to lowerplatinum prices.The palladium market moved from asurplus in 2011 to a significant deficit in2012. South African output was lowerfor the same reasons as for platinum,while less metal was sold fromRussian stockpiles. Gross demand forpalladium rose by 15%, or 900,000ounces, in 2012, following an increasein demand from the autocatalyst sectorand a return of investor interest.Following a prolonged surplus, therhodium market moved into balancein 2012, with reductions in supplybalancing increased demand fromthe autocatalyst and chemical sectors.AutocatalystsGlobal light vehicle sales grew by 5%in 2012 to 81 million units reflecting,for vehicles lighter than 3.5 tonnes,growth in North America, Japan andthe BRIC nations (Brazil, Russia, Indiaand China). This growth was offset byweakness in Europe and other regions.Ongoing economic uncertainty inEurope, for example, continued toimpact demand for new vehicles there,with sales approximately 8% belowthose in 2011.Increased substitution of palladiumfor platinum, together with a rise inthe production of gasoline vehiclesin North America and China, resultedin a 7% increase in demand forpalladium. Higher output of gasolinevehicles in 2012 also underpinned a6% increase in rhodium demand.Supplies of PGMs from recycling ofspent catalysts decreased by 12% to2.8 million ounces.01Operating and financial reviewAnglo American plc Annual Report 2012 79