G'day Mr Peacock,
The inertial platform detects the rotation of the Earth and so can calculate what it is rotating around, which is the Eath's axis, which lies true north/south and equipped with global magnetic variation data can compute the local magnetic heading. The inertial platform needs an accurate Lat/Long position to get things started. As latitude increases the detection of the Earth's spin axis takes longer as the local vertical approaches the axis itself.
Regards,
BH.