Markets for all metal, including aluminium and aluminium semi-fabricated products, softened as the year 2015 progressed. Disruptions to operations from energy supply, incoming metal quality rejections, plant upgrades and process instability in the second and third quarters interrupted the otherwise gradual improvement in plant performance leading to a strong final quarter.


Sales volumes for the year to 31 December 2015 totalled 198 000 tons, 7% lower than the corresponding period’s 214 000 tons. Energy supply proved to be inconsistent, with disruptions to both electricity and gas supplies impacting negatively on manufacturing output. Despite these challenges, sales of rolled products increased by 13% in the second half with improvements in process control, yields, equipment reliability and capacity planning and ending the year with record low on-site inventory.

Locally, the economy continued to soften during 2015. Demand, however, increased from both beverage packaging and automotive markets, which are our largest volume sectors and thus local sales increased by 18% to 70 000 tons (2014: 59 400 tons) mostly as a result of increased can body stock sales.


Market conditions in South Africa and in Hulamin’s major export markets were steady at the start of 2015, resulting in selling prices (and which includes rolling margins) improving in the first half. Locally, demand from the mainstream economy remained sluggish, although automotive and packaging demand more than compensated for this softness, resulting in local sales increasing by 18% to over 90 000 tons (including both rolled and extruded product sales) for the first time.

The slowdown in China’s domestic economy resulted in a number of Hulamin’s China-based competitors significantly increasing their efforts to export into Hulamin’s traditional US and European markets from the second quarter of 2015. The resulting oversupply, coupled with a Chinese primary aluminium price that was lower than the London Metal Exchange (LME) price, resulted in an over-supply situation in these markets.

As a consequence, rolling and extrusion margins dropped significantly throughout the year under review. At year-end they appear now to have stabilised at levels lower in US Dollars than in recent years. The effects of this oversupply was seen most rapidly in Hulamin’s standard product exports to the USA and Europe and have spilled over to a number of end-user markets, albeit to a lesser extent.


Turnover increased to R8,40 billion (2014 R8,04 billion) in spite of the lower sales volume and lower USD Aluminium price. The Rand weakened by 18% to an average of R12,76/USD, increasing Rand revenues and partially offsetting the effects of domestic cost inflation.

The total price of aluminium includes the LME price as well as international geographic premiums. Oversupply, largely from Asia has seen the average LME price (and geographic premium) decline by 20% from $1 866 in 2014 to $1 494 in 2015. Hulamin is exposed to US Dollar changes in the value of its aluminium inventory, known as the metal price lag effect which is reported in Rand. As a consequence of this decline in the aluminium price, a metal price lag loss of R161 million was reported in 2015 (2014: R53 million profit), a year-on-year reversal of R214 million.

Manufacturing costs were 17% higher than the prior year, driven mainly by higher US Dollar denominated costs, and the consolidation of costs from the Isizinda Aluminium (Isizinda) joint venture. Comparable costs increased by 10%. Earnings before interest and taxation (EBIT) were 50% lower compared to the prior year and operating profit before metal price lag was 14% lower at R456 million.

Despite the challenges encountered in a disruptive year, Hulamin remained focused on efficiency improvements and cost cutting measures to protect operating margins.

Following the acquisition of the Bayside casthouse by the Isizinda consortium on 1 July 2015, accounts for the Isizinda/ Hulamin joint venture were consolidated for the first time. Although Hulamin only owns 40% of the equity in Isizinda, it is deemed a subsidiary of Hulamin in terms of IFRS on the basis of the funding arrangements. The notable impact of this accounting treatment is the consolidation of key assets and the recognition of the bargain purchase gain on the land and equity settled share-based payment.

Positive operational cash flows contributed towards the funding of a substantial investment in expansion and replacement capital expenditure totalling R588 million. Capex included Hulamin’s new aluminium recycling facility to the value of R300 million, as well as the investment in the Bayside casthouse for R100 million. The balance of funding for these investments came from existing working capital funding facilities and a new-five year R270 million loan facility from Nedbank.

Cash flow in the second half of 2015 was neutral in spite of ongoing capital expenditure.

In keeping with Hulamin values, Hulamin is pleased to confirm the successful conclusion of the B-BBEE strategic transaction on 22 December 2015 with the issue of A1, A2, B1, B2, B3 ordinary shares. The transaction is an eight year deal that includes a strategic partner and eligible Hulamin employees.


Production volumes and efficiencies improved in the second half, in spite of two major gas disruptions arising from a fire at a refinery that also led to a planned maintenance start-up delay at the same refinery. Hulamin has lodged an insurance claim to compensate for the volume lost and increased costs arising from these shortages of supply. Engineering work on the partial conversion to Compressed Natural Gas was successfully completed in 2015.

During the year we took new and improved steps to improve our efficiencies. These include a specific focus on product and process quality as well as an upgraded approach to equipment reliability and maintenance. The improvements that we produced in plant performance towards the end of the year can largely be attributed to these efforts.

Product stream recoveries (also known as yields) that measure the ratio of sales to start mass improved in the second half and have settled at these higher levels. Efforts to make further improvements and consolidate this progress are ongoing through concerted efforts in process control (quality improvement) and through making improvements to maintenance and equipment reliability.

As the year progressed, the company started to tackle a number of cost lines with opportunities to be more efficient. These include energy consumption, the use of outside services as well as employee related costs such as over-time and fringe benefits. We will intensify these efforts in the year ahead to ensure that the company is better placed and more cost competitive.

Although safety performance deteriorated slightly when compared to the record performance in 2014, a number of risk mitigating actions were taken, and approximately R70 million was invested in improving the safety and health risk profile of the company. These efforts focused on risks associated with suspended loads and lifting devices, pedestrian/vehicle interfaces, molten metal explosion risks, man-machine interfaces, basement entry and confined spaces, risks associated with contractors on site and behaviour related risks.


In November, Hulamin and Nampak Limited concluded a three-year agreement for the supply of aluminium can body, can-end and can tab stock for the period from April 2016 to March 2019. The volume agreed totals approximately 110 000 tons over the three-year period. It is significant not only because the agreement improves Hulamin’s geographic sales profile in favour of local sales, but also because it provides the opportunity to source alloyed-aluminium scrap that is available in the local market in the form of used beverage cans (UBCs), can maker’s scrap as well as other usable forms of scrap. To this end, we successfully commissioned a R300 million recycling furnace in May 2015, followed by a scrap cleaning line in December 2015.



In the fourth quarter, we took an additional and important strategic step forward with the conclusion of a new melting ingot supply agreement with South 32, owners of the Hillside smelter in Richards Bay. We are pleased that we now have security of supply for both the Isizinda casthouse in Richards Bay (in the form of liquid aluminium) as well as solid form melting ingot for our Pietermaritzburg operation. Furthermore, the Hulamin/Bingelela consortium took ownership of the Bayside casthouse in Richards Bay that secures the supply of aluminium rolling ingot for our Pietermaritzburg operations. The final step in securing all forms of local raw material supply will be the re-introduction of the manufacture of extrusion billet, currently being planned.


Hulamin expects the momentum gained from improved manufacturing performance in the second half of 2015 to continue into 2016, with weak market conditions expected to persist both locally and internationally. The risks associated with energy disruption (impacts of energy disruption) are now lower following the installation of standby generators and the commencement of the conversion parts of the plant from LP Gas to CN Gas. There has been a decline in international conversion prices (rolling margins) that are expected to be partially offset by actions and initiatives currently being taken to achieve cost efficiencies, preserve cash, optimise sales and while Hulamin benefits from a weaker Rand against the US Dollar.

Richard Jacob
Chief Executive Officer




1935 to 1949


The origin of Hulamin dates back to 1935 when Aluminium Limited of Canada (Alcan) opened a sales office in South Africa. This was followed in 1940 by the registration of the Aluminium Company of South Africa. During and after World War II, demand for semi-fabricated aluminium had grown to the point where a first aluminium rolling mill was opened in 1949, on the current Pietermaritzburg site.



1960s to 1980s


The company was listed on the Johannesburg Securities Exchange as Alcan Aluminium of South Africa in 1969. In 1974, the Huletts Corporation acquired a controlling interest from Alcan, and changed the company name to Huletts Aluminium. The company was delisted in 1981 and, after The Huletts Corporation merged with The Tongaat Group to form Tongaat Hulett, the name of the company was changed to Hulett Aluminium (Pty) Limited. Alcan subsequently sold its remaining holding and Hulett Aluminium became a wholly-owned subsidiary of Tongaat Hulett in 1986.



In 1996, the boards of Hulett Aluminium and Tongaat Hulett approved a R2,4 billion expansion programme in the rolled products business, increasing capacity fourfold to 200 000 tons. The business was restructured and two additional shareholders were introduced, namely Anglo American and the Industrial Development Corporation, resulting in the Tongaat Hulett shareholding being diluted to 50%.





In 2006, Hulett Aluminium’s shareholders approved a further R950 million expansion project for the rolled products business, with the expansion having completed in 2009. In 2007, the company was unbundled from Tongaat Hulett, changing its name to Hulamin Limited, and listed on the Johannesburg Stock Exchange, whilst facilitating the acquisition of a 10% interest in Hulamin by Black Economic Empowerment partners and a further 5% by Hulamin employees (the employee transaction matured in 2012).



2010 to 2014


In 2012, Hulamin entered into an agreement with Nampak Bevcan to supply aluminium sheet for the manufacturing of aluminium bodied beverage cans. In 2014, Hulamin announced a R300 million investment in a scrap separation, processing and recycling centre in a bid to reduce dependency on primary aluminium. An application was submitted to ITAC for import tariff protection on aluminium rolled and extruded products.



2015 onwards


2015 represents Hulamin’s 75th anniversary of unlocking the potentials of aluminium beneficiation. In July 2015, Isizinda Aluminium (of which Hulamin is a strategic partner) took over the operations of the Bayside casthouse (situated in Richards Bay). The construction of the recycling centre was completed in the third quarter of 2015. Hulamin remains committed to the industrialisation of South Africa and will continue to play a key role in this initiative.