INTEGRATED ANNUAL REPORT 2012

Think Future. Think Aluminium. Think Hulamin.

Growth in the local aluminium market

HULAMIN’S GROUNDBREAKING AGREEMENT WITH BEVCAN TO SUPPLY ALUMINIUM COIL FOR THE MANUFACTURE OF ALUMINIUM-BODIED BEVERAGE CANS REPRESENTS A SIGNIFICANT STEP IN GROWING HULAMIN’S LOCAL MARKET.


All-aluminium beverage cans in Southern Africa

Hulamin has entered into a groundbreaking agreement with Bevcan (a division of Nampak Limited) to supply aluminium coil for the manufacture of aluminium-bodied beverage cans.

South Africa’s beverage cans, both soft drink and beer cans, are currently produced with a steel body and aluminium can-ends and tabs. South Africa is to follow the global trend of replacing these tin-plated steel beverage cans with aluminium-bodied cans, with the first locally-produced all-aluminium cans set to hit the market in mid-2013.

The all-aluminium can is popular worldwide and has become increasingly more attractive than steel, owing to its lightweight, corrosion-resistant features, its low cost of recycling as well as its ability to be cooled rapidly. In addition, aluminium has lower raw material and transport costs and better printing qualities. Aluminium cans are also one of the most successfully recycled packaging products internationally.

Historically, South Africa has enjoyed access to competitively priced steel, but in recent years steel prices have become increasingly volatile and less competitive.

Hulamin’s volume of local can body stock sales is forecast to increase to around 15 000 tons by 2015‚ in addition to the local can-end and tab stock which Hulamin currently supplies. Hulamin will switch a portion of its rolled products, which have typically been exported, to the new product range destined for the local and regional market. The conversion of the can body to aluminium in Southern Africa is a significant step in growing Hulamin’s local sales and the initial sales contract represents a 30% growth in its local sales of rolled products. Hulamin completed trials of the new product successfully in Europe in late 2012.

“It represents a very positive strategic change for us,” says Hulamin’s CEO Richard Jacob. “Benefits for Hulamin,” he says, “include longer production runs, greater exposure to the more stable South African market and enhanced cash flow.”

Hulamin’s customer, Nampak (Bevcan) is currently installing a new can production line, and plans to convert and upgrade three of its tin-plated steel can production lines, to enable production of aluminium cans at a total project cost of R600 million to R800 million. Bevcan will initially supplement its required supply with rolled aluminium can body coil imports, while Hulamin ramps up aluminium can body coil manufacturing and deliveries.

“Our first aluminium can production line will be commissioned in April,” says Nampak CEO
Andrew Marshall. “The big conversion will be in the summer of 2013.”

The change to aluminium cans will bring recycling spin-offs and create new job opportunities at Hulamin’s Pietermaritzburg operations. Hulamin is considering an appropriate investment in recycling infrastructure to enable it to procure used beverage cans and other secondary (post-market) metal units available in
South Africa and the regional market. It is planned to install a processing line to clean and shred cans, and de-coat the ink and lacquer from the metal, before melting and casting the aluminium back into rolling slabs, thereby creating a “closed loop” in the manufacturing and recycling processes.

The value of used aluminium cans is considerable – aluminium scrap is many times more valuable than steel and is able to be recycled at low cost. The impact on the local recycling market is likely to be significant. Hulamin aims to buy back the used, empty aluminium cans from scrap dealers to process and recycle them for reuse. Growth in demand for aluminium cans in the next few years could bring hundreds of millions of Rands into the economy, enabling people who survive on refuse picking to benefit from a higher price for the cans they sell to scrap metal dealers.

“The recycling rate for aluminium cans is likely to be far higher than for steel cans. Collectors will go for aluminium cans first because of their value. The latest figures from Brazil show that 98,3% of aluminium cans are recycled in that country,” says Jacob.

“Typically, a scrap dealer will pay five to ten cents a can”, he says. “Putting the attraction of aluminium cans into perspective: to pay for a loaf of bread a collector must sell 1 000 steel cans to a scrap merchant; fewer than 200 aluminium cans are needed to earn the same amount.” The recycling infrastructure could provide a further 5 000 to 10 000 people with “a decent living” from collecting and selling used cans.

South African Solar Photovoltaic Market

South Africa’s climate is well-suited to the utilisation of solar photovoltaic (PV) technology to contribute significantly to electricity generation in the country.

The anticipated development of the solar PV market in South Africa over the next decade offers Hulamin Extrusions exciting growth opportunities in this market.

The use of aluminium extrusions in the construction of solar equipment has proven to be ideal as a result of its physical properties – resistance to corrosion, low mass and high strength properties make it the ideal metal to use for the construction of solar panel frames and stands. Its growth internationally as the material of choice for solar PV applications has been further established by its technical capabilities, ease of fabrication, transportation and recyclability.

The South African government has, in accordance with its integrated resource plan for electricity, recently embarked on a major solar PV initiative which targets that around 20% of South Africa’s electricity requirements should come from solar by 2030. Many first world countries have made significant progress in solar programmes and technology has seen significant cost improvements – there is also a growing trend in private and corporate markets to install solar solutions around the globe.

At the end of 2012, the first two phases of the government’s solar tender process were adjudicated and a number of winning bidders are working with Hulamin Extrusions as a preferred local aluminium extrusions supply partner.

Hulamin Extrusions anticipates that the solar industry will grow significantly in the coming years as consumers and corporate clients seek renewable and cheaper supplies of energy. In addition to participating in the major public solar projects, our ambition is to capture a significant share of supply into the solar industry in the growing domestic residential and commercial markets.