SA aluminium body positive about aluminium prospects

Owing to the increased use of aluminium in the automotive and beverage packaging industries, demand for aluminium in South Africa has positive long-term prospects, says Aluminium Federation of South Africa (Afsa) executive director Mark Krieg.

“There is tremendous growth opportunity in South Africa’s aluminium industry and Afsa believes that South Africa can double its aluminium demand,” he states.

He adds that Afsa regards the demerger of base metals and coal mining company South32 from global mining major BHP Billiton, which came into effect in May, as positive. The demerger signalled to Afsa that more focus and priority would be given to aluminium assets, such as the Hillside smelter in Richards Bay, KwaZulu-Natal, as it forms a much bigger percentage of South32’s assets than of BHP Billiton’s.

In addition, BHP Billiton’s philosophy is to sell raw materials – such as bauxite clay, which is reduced to alumina – without beneficiating them, states Krieg. He praises the significant value addition achieved at South Africa’s Richards Bay operations, where alumina that arrives at Richards Bay from South32’s mining operations, in Australia, is reduced to 99.7% pure aluminium.

Aluminium has many applications and is used in construction for window and door frames, gutters and roof sheets; the electrical sector; heat exchangers, including car radiators; solar geysers; the food and beverage packaging industry; and the transport industry.

Krieg states that, while many of these products are imported from lower-cost producers, South Africa has stealth within certain areas of aluminium manufacturing. For example, local beverage can manufacturer Nampak Bevcan has been ramping up its transitioning from steel-body beverage cans to aluminium-body cans this year.

Nearly 140 000 tonnes of the 200 000 tonnes of rolled, sheet aluminium were exported in 2014, leaving about 60 000 tonnes for local production, states Krieg. It is estimated that the manufacture of cans will use about 50 000 tonnes/year of aluminium, doubling local demand for rolled, sheet aluminium.

The spot price of aluminium has dropped gradually in the past five years, from a high of about $2 800/t in February 2011 to a low of $1 476/t last month. Despite the current weak aluminium price, Krieg reiterates that aluminium prospects are still promising and that a lot is being done to bolster its position in the market.

Afsa’s task is to present the case for aluminium to government and put effort into encouraging parastatals to buy locally, he states. The federation also researches the different uses of aluminium and provides input and advice for its members and their customers in terms of using aluminium in their operations.