2-4 Cockspur Street
Johnson Matthey is a company with considerable pedigree. We have been supplying advanced materials for over 175 years. The real importance of this proud history is that it demonstrates the company's ability to maintain world leadership by adapting constantly to rapidly changing customer needs. Johnson Matthey has only maintained this position by remaining loyal to the values and beliefs which we contend are crucial to our business.
Johnson Matthey PLC has been involved in the processing and marketing of precious metals since its founding in 1817. Although it is most widely known for its activities in platinum--it is a world leader in the refining, marketing, and technological development of the metal--Johnson Matthey has been increasingly positioning itself as a leader in advanced materials technology, including catalysts and pollution control systems, electronic materials, specialty chemicals, and pharmaceutical compounds. Through a joint venture with Cookson Group PLC, Johnson Matthey also manufactures decorative and specialized materials for the ceramics, plastics, paint, ink, and construction industries. The company has operations in 28 countries.
The founder of Johnson Matthey was Percival Johnson, who in 1817 set himself up at 79 Hatton Garden in Holborn, London, as an "Assayer and Practical Mineralogist." As such, he valued gold by applying chemical and physical tests to determine the exact quantity of gold in a bar. Johnson's business rapidly gained distinction when he began to offer to buy back the bars of gold that he assayed, thereby becoming the first London assayer to offer a guarantee of quality. In the early 1830s a small gold refinery was built at the Hatton Garden premises for the refining and assaying of gold bars that were then coming into London from Brazil. These were complex gold bars, containing impurities that were not easy to remove. Having successfully extracted platinum group metals from the bars, Johnson's technical prowess established the firm at the forefront of the London bullion market. The firm took full advantage of the gold rushes of California, from 1848, and of Australia, from 1851, while supplies of silver arrived throughout the 1850s and 1860s in the form of demonetized silver coinage--coinage that had gone out of circulation--from European states. A large-scale silver refinery was built at adjacent premises in Hatton Garden.
Johnson's interest in metallurgy had already brought him into contact with platinum, which had been the subject of considerable scientific interest throughout the early 19th century due to its strength and resistance to corrosive acids. He set up a small-scale refinery for the metal at Hatton Garden, with limited supplies coming from Colombia.
In 1838 George Matthey joined the company as an apprentice. Matthey's scientific talents, coupled with a shrewd business sense, was the driving force behind the company's development in the platinum industry during the second half of the 19th century. When the Great Exhibition was first proposed, Matthey persuaded Johnson to exhibit a number of platinum articles, together with specimens of other platinum-group metals: palladium, iridium, and rhodium. The display was a success, and Matthey became determined to make the company preeminent in the platinum business. He succeeded in gaining a more assured supply of the metal through direct arrangements with owners of a mine in the Ural mountains in Russia, then a newly discovered source. In the 1867 International Exhibition in Paris, the company exhibited a wide variety of platinum-manufactured goods on a scale never seen before. The exhibit was awarded a gold medal "for perfection and improvement in the working of platinum." Under Matthey's direction, platinum refining and fabricating grew from about 15,000 ounces in 1860 to about 75,000 ounces a year in the 1880s. The manufacturing of sulfuric acid boilers was the largest single use of platinum until the early 1900s.
The diversity of the company had actually been established from the beginning by Johnson. From the chemical refining of gold, Johnson produced a range of vitreous colors for the glass and pottery industries. He became the first refiner of nickel in Britain, with "nickel silver," popular as a silver plate. In 1833 production of silver nitrate began, its use being primarily for medical purposes in the form of lunar caustic. Over the following decades the development of photography generated considerable demand for silver nitrate.
By 1860, the year of Johnson's retirement, many of the company's present-day activities had been established: assaying and refining of bullion, platinum refining and marketing, the production of vitreous colors for glass and pottery manufacturers, and a constant experimentation and development of niche markets for other rare and precious metals. Hatton Garden remained the rather compact home of the refining, assaying, and experimental work so vital to the firm's future. There was, in addition, a small workshop in Clerkenwell, used for the manufacture of platinum dishes, crucibles, and other laboratory instruments. Twenty-five people were employed in 1860, with a trio of partners who dominated the firm's development over the next four decades: George Matthey, his younger brother Edward Matthey, and John Sellon--Percival Johnson's nephew. It was this trio, and their descendants, who were to dominate the company's development until the mid-20th century.
Over the next 50 years, technological and marketing progress coincided with a securing of supplies. Gold-refining facilities were improved and expanded at Hatton Garden in response to the arrival of African gold, and the silver refinery received constant supplies of demonetized coin from across Europe. The reputation of the assaying and chemical laboratories grew, and in the mid-1880s Johnson Matthey succeeded in establishing itself as the ultimate referee of assayers and, as a certifier of ore quality, of South African Rand gold. Platinum supplies were secured from Russia through the co-operation of the metals houses of Quennessen of France and Heraeus of Germany; together the three European companies dominated the world platinum trade through control of this source, and ignored demands from the tzar for a refinery to be built within Russia. In 1894 the cartel was formalized through the creation of an association named The Allied Houses. In 1911 Johnson Matthey signed an agreement with the Nicolai Pavdinsky Company in the Urals, which gave Johnson Matthey the rights to mine a substantial body of platinum-bearing ore in return for Johnson Matthey building a local refinery. Despite World War I, and the chaos caused by the overthrow of the tzar, the plant was in full operation by 1918. However, no platinum ever reached London. During this period Johnson Matthey promoted the use of platinum as a corrosive-resistant electric conductor, and when platinum prices rose above gold for the first time in the 1900s the company encouraged the interest of jewelers. When the market for sulfuric acid boilers died at the turn of the century, fresh demand had been built up in other sectors.
In 1898 the company expanded its service to jewelers by purchasing new rolling mills in nearby Hop Gardens; here silver and gold alloys were formed into sheet, wire, and tube semimanufactured goods. The company's interest in colors had been boosted in the late 1870s when it gained the British and Empire marketing rights to a variety of industrial glazes, stains, and enamels, including so-called rolled gold, from the Roessler company of Frankfurt. Roessler was shortly renamed Degussa; the two companies had a history of close association dating back to the 1860s. After initial skepticism, the Staffordshire potters took to the advanced colors and Johnson Matthey became an established supplier in that area. Meanwhile the company's interest in the rare and often novel metals was given a strong commercial footing with the 1870 acquisition of the Manchester-based Magnesium Metal Company. During the 40 years that followed, the Magnesium Metal Company's plant at Patricroft produced magnesium for flash photography and laboratory work, antimony for hardening bullet heads, vanadium for black dye and ink, and electrolytically-produced aluminum. It is thought that the statue of Eros in London's Piccadilly Circus--dedicated to the philanthropist seventh Earl of Shaftesbury--was made of aluminum from the Patricroft works.
In 1891 the company became Johnson, Matthey & Co. Limited, a private limited company, and during the 1890s and 1910s an increasing amount of departmentalism took place as the sons and nephews of the ruling trio took over the responsibilities, and increasingly delegated power to trusted clerks and technical experts. It was at this point that a corporate policy was adopted that remains at the heart of the company still: only to take part in activities in which the company could dominate. When a product's development fell out of the control of the company, Johnson Matthey's interests in it would be sold off.
World War I through World War II Era
During World War I Johnson Matthey established itself as an innovative developer of strategic materials, despite significant supply disruptions affecting most of the metals that the company dealt with. The company was able to satisfy the Allied demand for products such as platinum catalysts, used to make sulfuric acid for explosives manufacturing, and magnesium powder, used to make incendiary bombs for dropping on German airships. In 1916 the company was brought under the direct control of the government, and platinum catalysts and electrical and magneto contacts for cars, airplanes, and tanks were manufactured in a modernized platinum workshop. The company expanded its production of silver nitrate to meet the demands of the photographic industry, and in 1916 began manufacturing its own liquid gold. In 1918 the colors division was given a firm production base through acquisition of the Sneyd color works at Burslem. A Birmingham branch of Johnson Matthey was established in the same year to supply the city's jewelry trade, and the Sheffield silversmith E.W. Oakes & Co. Ltd. was purchased. Despite difficulties in obtaining supplies, demands of industry were met and at the end of the war the air ministry gave an official message of thanks to the company for its supplies of high-precision equipment.
In 1918 John Sellon died. In order to secure a closer working relationship with the two South African mining houses that were of most significance to the company's gold activities, his shares in the company were offered in equal parts to Consolidated Gold Fields of South Africa Ltd. and to the Johannesburg Consolidated Investment Company. This is the origin of the controlling stake held by the Anglo American Corporation today.
During the early 1920s the company faced considerable problems due to continued disruptions in the supply of precious metals. From 1922 the South Africans refined their own gold, while regular supplies of platinum from the Urals had failed to resume after the war despite the ingenious attempts of Arthur Coussmaker. Coussmaker was a platinum expert with Johnson Matthey whose attempts to gain a secure supply of Russian platinum had involved deals with White Russian military forces and impromptu meetings with Soviet officials in western European cities. The difficulties of supply led to the early 1920s being a low point in the fortunes of Johnson Matthey. In 1924, however, Dr. Hans Merensky discovered the huge platinum-laden reef in the South African Transvaal that bears his name today. Coussmaker, by then a board member, made an immediate trip to the Transvaal where he identified the Rustenburg area as the most promising part of the reef. Consolidated Goldfields of South Africa and Johannesburg Consolidated Investments had mines in the Rustenburg district, and after an initial platinum mine boom in the mid-1920s those were the only mines operating in the slump that followed. Coussmaker persuaded the two mining houses to merge their platinum interests, and in 1931 the Rustenburg Platinum Company was formed. Johnson Matthey became a refiner and distributor for what was, and remains, the world's largest platinum mine. A smelting works and an electrolytic refinery were built at Brimsdown, in Essex, to extract the platinum metals according to a refining method established by Ernest Deering and Alan Powell of the Hatton Garden staff.
In 1919 Johnson Matthey joined N. M. Rothschild's bank and four other leading bullion brokers to form the London Gold Market, where a daily price-fixing still sets the price of gold. When gold supplies from South Africa ended, the sulfuric acid refinery at Hatton Garden was kept in operation through a constant stream of demonetized silver from central and eastern Europe. Much of this came via the Silberfeld brothers, initially based in Riga, who throughout the interwar period supplied Johnson Matthey with Russian Imperial coins and gold rubles, and with silver Maria Theresa coins from an office in Vienna. The company established branches in Warsaw and Prague, and came to own 75 percent of the Bank Powszechny Depozytowy in Poland.
Johnson Matthey's manufacturing capacity in this period was boosted by the acquisition in the early 1920s of the metal fabricating firm of R. Buckland & Son Ltd. In 1925 Johnson and Sons Smelting Works Ltd. of Brimsdown, Middlesex, was acquired. This was a sweeps, scrap, and residue refinery business that had been set up originally in the mid-19th century by a brother of Percival Johnson. During the 1930s the bullion refining and smelting operations were rationalized, the colors section was strengthened by a full-time research department, and a team of enterprising salesmen crossed Europe in motor cars.
At the outbreak of World War II Johnson Matthey was appointed government agent for the control and handling of platinum stocks, and manufactured items of the material grew in response to the rising demand. Products included electrical fine wires, electrodes, aircraft spark plugs, laboratory crucibles, and wire gauze catalysts for the preparation of nitric acid. Demand for platinum with a high iridium content led to Coussmaker's establishment of a refinery in Pennsylvania, where concentrates from Alaskan deposits were turned into contact tips for automagnets.
While bullion trade was severely limited by Bank of England supervision, and jewelry sales were almost forbidden, industrial demand--especially from photographic related industries--was strong for silver-based products. Some special uses of silver compounds included the manufacture of silver ball bearings for airplane engines, and desalination packs that enabled ditched airmen, or shipwrecked sailors, to survive on sea water. Bomb damage during the blitz of autumn 1940 resulted in the Brimsdown smelting works being put out of action temporarily, and the entire contents of the company museum and archive collection were destroyed.
With the end of the war came a period of rapid overseas growth for the company, much of it having been prepared from the early 1940s in expectation of a postwar boom. Representatives were sent around the world to study competitors, examine suppliers, and to establish new markets. Operations in North America, South Africa, Australia, and India were expanded as a result, with growth in Europe taking place later with the establishment of subsidiaries in France and the Netherlands in 1956, Italy in 1959, Sweden in 1960, Belgium in 1961, and Austria in 1962. Developments at home moved at an equally rapid pace: two colors factories in Staffordshire were opened immediately after the war, and in 1951 the colors section acquired Universal Transfers Co. Ltd. Johnson Matthey was now a market leader in the manufacture of color pigments and screen-printed transfers for the pottery and glass industries. In 1953 the Harlow Metal Co. Ltd. was formed to merge the company's mechanical production interests, and in 1957 a new platinum refinery was built at Royston which brought together the company's refining operations. In 1954 Universal Matthey Products Ltd. was formed, to produce platinum catalysts for U.S. manufacturers of high-octane petrol. Enthusiasm by the North American auto industry for catalytic converters encouraged Johnson Matthey to conduct extensive research on the auto catalyst during the late 1950s and early 1960s. In 1962 L. B. Hunt was appointed director of research at new purpose-built laboratories at Wembley.
In 1963 Blythe Colours, based in Stoke-on-Trent, was acquired. This brought to Johnson Matthey an extended range of industrial colors, a worldwide network of agents, and a strong north European section based in the Netherlands. A consolidation of bullion activity took place during the 1950s and 1960s, culminating in the formation of Johnson Matthey Bankers Ltd. (JMB). Representing Johnson Matthey on the London gold market, JMB traded in the gold, silver, and precious metals produced by Johnson Matthey subsidiaries around the world.
A major reorganization of the company took place in 1966 and 1967, with the establishment of four divisions within which all the company's activities and subsidiaries were placed. These were the Jewelry and Allied Traders Division (JAT); the Chemical Division; the Industrial Division; and the Ceramic Division. A mechanical production unit was established to cater to the production needs of the four divisions. In 1969 expansion into Asia culminated with the establishment of Tanaka Matthey KK, a joint venture company with Tanaka Kikinzoku Kogyo KK of Japan. Japan is a major consumer of platinum jewelry, and the joint venture has enabled Johnson Matthey to dominate the market there.
1970s and 1980s
The 1970s were a decade of organic growth, with few acquisitions taking place. In 1980, however, a significant move into the U.S. jewelry trade--a business that was unfamiliar to the company--led to losses estimated at over £60 million and in 1981 the board looked to JMB to help make up the loss. JMB had done well from the spectacular rise in bullion activity that had accompanied the Soviet invasion of Afghanistan in 1980, and pressure was placed on the subsidiary to expand out of bullion-related loans and into high-risk lending in areas with which it was unfamiliar. The bank's loan book expanded, from £50 million at the end of 1981 to some £500 million by March 1984, with its contribution to group profits going from just under 25 percent in 1981 to more than 60 percent in 1983. By late 1983, however, the Bank of England had begun to suspect the quality of some of the loans. In the summer of 1984 their suspicions extended to cover the accounting practices of Arthur Young. In September 1984 the full extent of the bad loans taken on by JMB became apparent, and the Bank of England organized a bailout by JMB's creditors, shareholders, and U.K. clearing and merchant banks. The Bank of England purchased JMB for a token £1. The collapse of JMB was a disaster: in the words of The Economist, October 6, 1984, "The Johnson Matthey Parent Company lost its shirt, [and] its shareholders a lot of money." Meanwhile, in 1981 Johnson, Matthey & Co. Limited officially changed its name to Johnson Matthey Public Limited Company.
Charter Consolidated, effectively the holding company for Anglo American's interests in Johnson Matthey, found itself with a 38.3 percent stake in the group as a result of its assistance in the bailout of JMB, and sent in its own man, Neil Clarke, to become Johnson Matthey's chairman. In June 1985 Clarke appointed Gene Anderson as chief executive. Over the next five years the company was transformed, with £70 million of disposals made over the next two years, including an interest acquired in Wembley Stadium. The workforce was cut significantly while profits doubled to £64 million between 1986 and 1989. Seventy-four semiautonomous companies, loosely grouped into divisions, but many legally distinct and with their own boards, were reorganized into four operating divisions. These were the Catalytic Systems Division, which includes automotive exhaust and industrial air pollution control systems; the Materials Technology Division, which combines the group's rare-earth, pharmaceutical, and special materials interests; the Precious Metals Division, which acts as the sole marketing agency for Rustenburg Platinum and that controls the group's gold and silver marketing and refining businesses; and the Colour and Print Division that ties together the group's industrial colors and printing businesses. Investment in new plant and research was expanded, and in 1990 a new autocatalyst production plant was opened in Belgium to meet anticipated European demand. Research into the medical possibilities of platinum-based drugs was boosted, with cancer and HIV-fighting drugs developed.
In December 1989 Anderson resigned after failing to persuade the board to expand into nonplatinum areas. The proposed move would have diluted Anglo American's shareholding in Johnson Matthey through a share issue, and moved Johnson Matthey away from an increasing reliance on the Rustenburg mine. In testing the resolve of the South Africans, Anderson confirmed their control over the group. Almost immediately after Anderson resigned, Clarke also resigned. David J. Davies, Charter's deputy chairman, was transferred to become Johnson Matthey's chairman.
1990s and Beyond
Johnson Matthey's operating results in the early 1990s were generally positive, as the company began to see results from its late 1980s restructuring. Sales increased steadily from £1.73 billion in 1991 to £1.96 billion in 1994. Before-tax profits also increased steadily to a record £73.8 million in 1993 before declining in 1994 to £65.3 million thanks in part to the loss of a catalytic converter contract with General Motors toward the end of the year. Throughout this period, the company continued to restructure its operations, in particular in its Materials Technology Division. On the down side, the Precious Metals Division continued to provide more than 60 percent of Johnson Matthey's sales, while contributing only about one-quarter of the operating profit.
There were signs, however, that the company would be able to lessen the impact that precious metals had on its overall performance. The clearest signal came in 1993 when Charter Consolidated sold its 38.3 percent stake in Johnson Matthey for £342 million ($492 million). Although about 20 percent would remain in the indirect control of Anglo American since it was sold to Garrick Investment Holdings Ltd., a firm jointly held by Johannesburg Consolidated Investment Co. and Minorco of South Africa, both of which in turn were in the indirect control of Anglo American, the other 18.3 percent was sold to two British brokerage firms, Barclays de Zoete Wedd Ltd. and UBS Phillips & Drew Ltd, who were to sell the shares to investors, thus somewhat diluting Anglo American's control.
Anglo American remained in charge of Johnson Matthey through chairman Davies, but the next few years would see the company make its most aggressive expansion moves in years, all of which fell outside the precious metals area. In March 1994, Johnson Matthey and Cookson Group PLC, a U.K.-based metals-fabrication firm, combined their respective ceramics businesses into a 50-50 joint venture called Cookson Matthey Ceramics plc. This venture absorbed Johnson Matthey's Colour and Print Division, leaving the firm with the remaining three divisions and its share of the Cookson joint venture. Later in 1994, Johnson Matthey and Cookson entered into merger talks that would have created a global precious metals/industrial materials giant, but discussions were discontinued in November after the two sides could not come to an agreement on terms. The joint venture was not affected, however, and it subsequently posted positive results during its first two years in existence.
The Materials Technology Division was the next area to be targeted for growth with the 1995 acquisition of Advance Circuits Inc. (ACI) for £106.4 million ($170.2 million). ACI was a U.S.-based electronics industry supplier of multilayer printed circuit boards and plastic laminate packaging for semiconductors, the latter an emerging industry. The deal extended Johnson Matthey's range of products within the area of electronic materials, so much so that following the acquisition the company's divisions were restructured once more. The Materials Technology Division had two components--electronic materials and chemicals. The former, including the newly acquired ACI, would become a new Electronic Materials Division, a move that highlighted the importance of this area to the company's future. The latter was merged into an enlarged Precious Metals Division, which then consisted of platinum marketing and fabrication businesses, precious metal chemicals and platinum refining businesses, and worldwide gold and silver businesses. The new Electronic Materials Division was soon bolstered further through the early 1996 purchase from Cray Research Inc. of printed circuit board manufacturing facilities in Wisconsin. The company also planned to invest $200 million in capital expenditures from 1996 through 1998 in its newest division.
Johnson Matthey had its best year ever in 1995, with total sales of £2.27 billion and before-tax profits of £95.4 million. The initial success of its moves to lessen the importance of its Precious Metals Division bode well for the company's future as long as Anglo American's influence could be deflected enough for such moves to continue.
Principal Subsidiaries: The Alta Group Inc. (U.S.A.); Arora-Matthey Limited (India; 40%); Cookson Matthey Ceramics plc (50%); Johnson Matthey & Brandenberger AG (Switzerland); Johnson Matthey (Aust) Limited (Australia); Johnson Matthey Catalog Company Inc. (U.S.A.); Johnson Matthey Electronics Inc. (U.S.A.); Johnson Matthey GmbH (Germany); Johnson Matthey Hong Kong Limited; Johnson Matthey Inc. (U.S.A.); Johnson Matthey Investments Inc. (U.S.A.); Johnson Matthey Japan Limited; Johnson Matthey Korea Limited; Johnson Matthey Limited (Australia); Johnson Matthey Limited (Canada); Johnson Matthey (New Zealand) Limited; Johnson Matthey (Pty) Limited (South Africa); Johnson Matthey SA (France); Johnson Matthey (Singapore) Pte Limited; Matthey Rustenburg Refiners (Pty) Limited (South Africa; 49%); Ryoka Matthey Corporation (Japan; 50%); SA Johnson Matthey NV (Belgium); Svenska Emissionsteknik AB (Sweden).