The platinum price has exploded into record territory during the past 12 months, taking the share prices of the main platinum mining companies with it - to the surprise of many investors and industry executives.

One top executive who clearly did not see it coming was Impala Platinum (Implats) CEO Keith Rumble. In September last year he sold 8 884 of his Implats options at R690,31 each.

No sooner had he done so than the Implats share price started to run hard. It peaked initially at a record R1 270 on April 6, then took off again in May setting new records up to R1 400. The platinum price was about US$843 in January last year and had reached $941 by October, moving up to $1 245 in May.

Rumble realised R6,1m from the sale of those shares. Had he sold at the April peak, he would have made R11,3m, or 85% more. He was in good company. Not even the authoritative industry report produced by UK metals trading firm Johnson Matthey (JM) saw the price rise coming.

JM's 2006 report on the platinum market, released on May 15, predicted the platinum price could trade "up to as much as $1 250 during the next six months". Platinum hit that level on May 10 before the report was released.

The driving force behind the price is rising demand from the automobile industry, which uses it in the autocatalysts that clean up exhaust emissions, coupled with yet another shortfall in expected supply.

Most of the world's platinum comes from SA, which produced 77% of total supply in both 2004 and 2005, according to JM's statistics. And the SA platinum miners have not been bringing on new production at the rate they had forecast.

Autocatalyst demand is increasing because of the rising popularity of diesel cars and the widespread tightening of emission regulations on light and heavy diesel vehicles. Platinum has to be used in the autocatalysts for diesel engines, whereas for petrol engines it can be substituted by cheaper palladium. JM says autocatalyst demand for platinum rose 8% (or 300 000 oz) in 2005, to set a new record of 3,86m oz.

The downside is the negative effect of the higher prices on the other pillar of the platinum business - jewellery demand. Purchases of platinum for jewellery dropped 6% last year to 2,02m oz, with demand in the critically important Chinese market falling for the third year in a row.

Chinese purchases of platinum fell to 910 000 oz in 2005, more than 500 000 oz lower than the record demand achieved in 2002. Platinum's loss was palladium's gain, as manufacturing jewellers used it instead. JM expects platinum demand to continue rising this year, faster than in 2005. JM also believes that SA platinum mines will be able to step up supply more rapidly, "barring further disruptions to production", but that the supply deficit will continue.

In April, precious metals consultancy GFMS released its predictions for 2006. It expected the platinum market to return to a surplus situation this year, with the price in a range of $980/oz to $1 250/oz.

Those are mouth-watering price levels for the SA platinum companies and it's no surprise that the number of platinum juniors continues to rise, while established producers are minting money.

There have also been changes in ownership among the juniors. Barplats founder and chairman Loucas Pouroulis left after a disagreement with the major Canadian shareholders and set up another operation, Eland Platinum, adjacent to Barplats ground.

Pouroulis also poached top executives from Barplats to help set up the new mine, which listed on the JSE at the end of March. Barplats went through a change of control in the wake of Pouroulis's departure, with the Canadian hedge funds that had originally put up the money to back him selling out to Canadian-listed platinum junior Eastern Platinum (Eastplats).

The big question is when there might be a bout of consolidation between the junior platinum companies, as well as some cherry-picking by the likes of Impala Platinum and Lonmin, which last year bought control of Messina Platinum.

If so, the main instigator could be Aquarius Platinum, run by CEO Stuart Murray.

Murray had a busy year with Aquarius. The highlight on the operations front was the successful start-up of new mine Everest, where production was ramping up smoothly during this year's March quarter and already showing cash margins of 53%. The final capital cost of the mine was estimated at R707m, compared with the original forecast of R819m.

That's the kind of performance which must leave Anglo Platinum (AngloPlat) CEO Ralph Havenstein banging his head on his desk in frustration at the inability of his group to come close.

After three years in the hot seat at AngloPlat trying to repair the problems he inherited from Barry Davison - who remains non-executive chairman of AngloPlat - Havenstein is struggling to transform the world's largest platinum mining company into a more efficient operation.

In February AngloPlat reported a 59,5% rise in operating profit for the year to December, but the group was severely criticised for its poor cost control. The numbers showed a 12,3% rise in the cost per platinum ounce sold - three times the ruling CPI inflation rate.

Havenstein was challenged at the annual results presentation by Citigroup analyst Fidelis Madavo, who told him: "We hear year in and year out that things are going to get better, but it's just not happening." One of Havenstein's responses has been to set up joint ventures (JV) on new platinum mines with the juniors who are outperforming him. Aquarius signed its second "pool and share" agreement with AngloPlat last year for its Marikana mine, after the precedent-setting agreement at Kroondal.

AngloPlat also teamed up with chrome miner Xstrata by forming the Mototolo JV to develop a mine on platinum reserves contributed from mineral rights held by both companies.

Despite the operating problems, the AngloPlat share price has been largely unaffected. After lagging Implats, AngloPlat's price also moved into record territory, hitting R708 by early May.

Implats again showed AngloPlat how it should be done by turning in an excellent set of operating results from its major mines in the Rustenburg area. But the group has now run into political problems in Zimbabwe, from which it had planned to source much of its long-term growth.

The Zimbabwe government said in January that it wanted to take a 51% stake in the country's platinum mines, but it proposed paying for only 26%. The outcome of these proposals is uncertain.