Interviews

“In South Africa, among the various industrial sectors, packaging is the current major aluminium demand driver”, Mr Muzi Manzi, Chief Executive Officer of the Aluminium Federation of South Africa (AFSA)

INTERVIEWEE
interview Image
Category
Interview
Date
08-Apr-2022
Source
AL Circle
Detail

Mr Muzi Manzi is the Chief Executive Officer of AFSA and is responsible for the management and governance of the Federation. He is also a member of the AFSA Board of Directors, responsible for development and implementation of the South African Aluminium Industry Roadmap (SAAIR). One of the deliverables of the SAAIR is to elevate the local industry to become competitive to be able to double local aluminium demand and ultimately for the country to become a net exporter of value-added aluminium products. Muzi Manzi, a qualified Metallurgical Engineer and MBA, has an extensive experience in the aluminium industry, especially related to policy development and stakeholder engagement.

Being an integral part of the aluminium industry, especially in South Africa, he has shared his projections about the market trend this year in our LeaderSpeak 2022 e-Magazine.

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AlCircle: What is your anticipation of the demand-supply trend in South Africa’s aluminium industry in 2022?

Mr Muzi Manzi: In South Africa, the aluminium industry is a leading contributor to the economy. The country manufactured roughly 717,000 tonnes of refined primary aluminium in 2020, of which 474,000 tonnes were consumed locally. In 2020, a total of 468 million dollars was spent on aluminium imports against exports of approximately 1.5 billion dollars in the same year to countries such as the United States, the United Kingdom, India, Germany, and South Korea to name some of the country’s major trade partners. It is worth noting that South Africa does not only produce primary metal but also has a significant semi-fabrication, secondary and downstream aluminium sector. Furthermore, the heightened focus on global environmental preservation, as evidenced by the resolutions of the recently held COP 26, will continuously put pressure on leading Aluminium producing countries such as China.  With China accounting for some 56 per cent of the refined aluminium global output, any curtailment of production due to these environmental pressures will keep the aluminium price at heightened levels into the near future. Since 2020, we are experiencing a soaring aluminium price on the London Metal Exchange due to rising energy costs globally, and this situation is likely to persist owing to the ongoing invasion of Ukraine by Russia. The continued war is expected to result in a reduced supply of aluminium, considering that Russia is a prominent producer of the commodity. The resultant war-induced contractions in aluminium production are likely to benefit other producers like us in South Africa since global demand for the metal is predicted to rise.

AlCircle: Do you think the Ukraine-Russia conflict will pose a challenge for the aluminium industry of South Africa?

Mr Muzi Manzi: The Ukraine-Russia conflict will pose a significant challenge to the aluminium industry, not only in South Africa but globally. The invasion of Ukraine by Russia has attracted the wrath of the global community, with several countries and trading blocs having imposed trade and financial restrictions on Russia since the start of the conflict. Considering that Russia is one of the biggest global Aluminium producers accounting for 6 per cent of the produced aluminium, these measures are likely to impact negatively the availability of supply. It also must be borne that the decision of the United States to impose further sanctions on Russian petroleum products has already resulted in fuel and gas prices hikes in recent months. These elevated prices will surely cause inflationary effects on consumers and ultimately impact societies’ disposable incomes, which will stall construction projects and procurement of new automobiles, the two main areas of aluminium usage.  

AlCircle: How do you feel the current price rally on the London Metal Exchange due to the Russia-Ukraine conflict will affect the global end-user market?

Mr Muzi Manzi: The price rally on the London Metal Exchange attributed to the Russia-Ukraine conflict, and prior to that, the Covid-19 related shipping crisis, will negatively affect the international end-user market. There is a real risk that this heightened pricing, if sustained for too long, could be our demise by making the metal uncompetitive for certain applications. It is without doubt that the Russia-Ukrainian war will result in increased cost of producing aluminium, which will ultimately lead to higher prices of aluminium products. In my view, a price rally of this nature, despite it being good for the fortunes of the industry, after many years of depressed prices, may accelerate and make competitive alternatives more economically viable, and this may displace aluminium in certain applications. On the other hand, I think that gas-based marginal smelters that are already higher on the aluminium smelting cost curves are likely to close if the prices of energy due to the Russia-Ukraine war remain this high for sustained periods resulting in further reduced supply.

AlCircle: Being a voice of the South African Aluminium industry, what are your plans to help the members of AFSA combat the crisis?

Mr Muzi Manzi: Unfortunately, AFSA does not have any arsenal of measures in its toolbox to deal with this crisis of global proportions. However, the South African aluminium industry will dig deep and expand on the already started continuous improvement opportunities as well as implement energy-saving measures to remain competitive. We are optimistic that this crisis will be resolved soon, and the market forces we have become accustomed to will return to guide business practices.

AlCircle: In what ways are you planning to promote the South African aluminium industry in 2022?

Mr Muzi Manzi: In 2022, I plan to promote the South African aluminium industry in various ways. We will work with the South African Government and other stakeholders to review the South African aluminium industry roadmap of 2017.  This review will give us a clearer perspective of what has been achieved so far, what of the roadmap have become obsolete and how do we revise it to respond to the ever-changing landscape of the industry. We further plan to expand our drive to position the local industry as a formidable and significant producer and supplier of aluminium in South Africa, the rest of the African continent and other markets beyond the continent. 

Once again as AFSA, we plan to host the AFSA International Aluminium Conference and Exhibition in Cape Town at the ICC on the 26th and 27th of October, 2022. We are looking forward to hosting many of you in our country later this year to enjoy our hospitality and learn more about the South African aluminium industry.

Secondly, through the government established smelting plant, I will oversee the production of competitively priced primary and secondary aluminium. The extensiveness and competitive nature of the global market necessitate the South African Aluminium Industry to produce various variants of its aluminium.

AlCircle: How do you foresee the consumption pattern of aluminium in South Africa in 2022?

Mr Muzi Manzi: We foresee significant demand for aluminium in South Africa and globally into the future. The South African government has announced major post-pandemic recovery programmes, with construction being in the forefront of this developmental agenda. The country has further embarked on several renewable energy projects to bolster the supply of electricity. In all these projects, the Aluminium industry is well positioned to supply input materials owing to the Government’s localisation drive. Secondly, the industry's preparation for environmentally friendly aluminium production methods aligns South Africa with leading producers in developed countries. In this regard, improving our energy mix with the inclusion of renewable energy will provide the South African aluminium industry the much-needed competitive edge.

AlCircle: Which industrial sector among the building & construction, packaging, and automotive sectors will drive South Africa's aluminium market growth?

Mr Muzi Manzi: In South Africa, among the various industrial sectors, packaging is the current major aluminium demand driver, closely followed by construction and the future demand to come from the automotive sector as migration towards electric vehicle deployment ramps up. Due to the automotive lightning and energy conservation trends, the demand for aluminium in automotive development is estimated to rise significantly. Even in its current form, the South African automotive industry, which is based on the production of internal combustion engine vehicles, remains a key growth area of the South African aluminium industry.

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