Hulamin might approach Alcan for aluminium

NEW JSE entrant Hulamin, an aluminium semi-fabricator company, might buy aluminium from Alcan once that company is producing ingots at its project at Coega on South Africa's east coast, Hulamin CEO Alan Fourie said.

Hulamin sources its aluminium from BHP Billiton's aluminium smelters at Richards Bay in South Africa. This is the closest source of raw material for Hulamin, which has listed after being split from sugar group Tongaat Hulett, an Anglo American subsidiary. Anglo has embarked on a process of shedding businesses not core to its mining strategy.

Hulamin will investigate sourcing aluminium from other players, Fourie said at the listing of the company on the JSE.

"We haven't started talking to Alcan but there are a number of options we have to get our minds around in terms of what is the best way to bring the metal from Coega," he told reporters.

Click Here to subscribe to our daily newsletterAlcan's planned smelter is the key project for the Coega, an industrial zone the South African government is developing at a cost of some R11bn to attract investors.

The Alcan smelter is forecast to produce 720,000 tonnes of aluminium ingot a year in a project worth some R21bn. This will be South Africa's third aluminium smelter. Alcan will export 95% of its annual production.

Hulamin's listing is not intended to be a cash-raising exercise, Fourie said, adding the company had enough cash for its current growth strategy.

Hulamin currently produces about 210,000 tonnes of rolled and extruded aluminium products for sale in the export and domestic markets. In October, it embarked on a R950m project to grow volumes of high value products and increase capacity to 250 000 tons per annum.

About 1.4 million tonnes a year of primary aluminium is produced in South Africa, of which 300,000 tonnes is beneficiated in the country. Hulamin sees this as a growth opportunity.

"We see significant opportunities in the market, we believe we are a very competitive player," said Fourie, adding Hulamin is a smaller player and it was relatively easy to grow its output without disrupting the market.

Fourie declined to be drawn on the direction aluminium prices might take in the future. "If you asked me two years ago I wouldn't have been able to speculate that the price would be at this level now, so it very hard to speculate on the price."

Hulamin will retain its 49% stake in the Zimbabwe-based aluminium processing company Almin despite the economic situation in the country, he said. Zimbabwe's inflation is running at 4,000%, the highest in the world. There are foreign currency, fuel and electricity shortages.

"It is very difficult to operate in such market conditions but Zimbabwe is a very resilient country, it's been through a lot but its economy is still going, and we have had interest in that company for 30 years," Fourie said.

"I do believe that the economy would recover, it's just a matter of time," he added.