RELIANCE ON KEY CAPITALS
GOVERNANCE AND LEADERSHIP
Social, relationship and intellectual capital
Social, relationship and intellectual capital encompasses our relationships with communities, groups of stakeholders and other networks and promotion of innovative thinking. It incorporates shared values and behaviours and provides us with our social license to operate. Interaction with key stakeholders, consideration of their concerns and earning their trust are central to maintaining and developing this capital.
Looking back on our 2016 goals
Focus for 2017
Key Stakeholder Relationships, RELIANCE AND IMPACT
Hulamin recognises that in order to create sustainable value for all, it needs to be responsive to all stakeholder expectations. To meet these expectations it is crucial to build trust and respect with our stakeholders since this will impact positively on our reputation allowing us to engage proactively on issues of mutual interest.
|STAKEHOLDERS||STAKEHOLDER IMPORTANCE TO HULAMIN||EXPECTATIONS AND CONCERNS|
Local, provincial and national government, including regulatory authorities. They license us to operate and provide a supportive regulatory environment through:
Continual and responsible contribution to regional development:
|Shareholders, investment community, creditors and lenders who provide us with the financial capital required to sustain our growth. This is covered in detail under the financial capital section here.||
Sustainable growth and returns on investment:
||We are reliant on customers and potential customers to sustain revenue generation and growth. The majority of our sales are to export customers. We are focused on growing the local and regional markets This is covered in detail in various sections of this report, such as here.||
Reliable service, good quality products and competitive prices:
||Suppliers of metal and other products and service providers are important as we are reliant on them to provide safe, good quality and good value products and reliable services that support growth.||
Continued growth and relationships:
||Employees are the key underpin to achieve operational performance and objectives. This is covered in detail under the Human capital section here.||
Provision of gainful and safe employment:
||We build and nurture existing relationships, and create a conduit to better understand community needs and interests. This allows for us to contribute to transformation, enterprise development and various corporate social investment initiatives.||
Responsive contribution to community interests and needs:
Hulamin is situated in a society with enormous challenges and while the company can play a leadership role in many areas, the business is also symbiotically linked to the socio-economic and natural environment in which the company is located.
An amount of R2,1 million was donated towards CSI initiatives during 2016.
Hulamin promotes the economic empowerment of black South Africans. Hulamin’s business relationships favour entities that actively pursue employment equity and have black economic empowerment programmes. These entities are encouraged to go beyond supporting the new codes by actively improving their score on an ongoing basis.
The future of the country and of Hulamin depend on growing the economic involvement in mainstream business of all previously disadvantaged groups. Our intervention programme of preferential procurement is committed to achieving these objectives.
Due to the nature of its business, around 66% of the value of Hulamin’s purchases is aluminium metal from two local aluminium sources. Remelt ingot is sourced from South 32 and rolling ingot from Isizinda Aluminium, both in Richards Bay. Isizinda Aluminium purchases molten aluminium from South 32 to cast rolling slab for onward sale to Hulamin.
Hulamin spent R2,8 billion with Isizinda Aluminium over the last 12 months. Isizinda Aluminium commenced operations in July 2015 and has no B-BBEE rating. Although Isizinda Aluminium is 60% black owned, it can only be rated for the first time in 2017 after having completed a full financial year.
Hulamin spent R2,1 billion with South 32 over the last 12 months. After acquiring the Hillside Smelter from BHP Billiton, South 32 commenced operations in June 2015 and has a level 8 B-BBEE rating.
The matters outlined above have resulted in a decrease in Hulamin’s overall B-BBEE rated spend from 93,4% to 29,7% of Hulamin’s total expenditure. Previously this aluminium was procured from BHP Billiton Bayside and BHP Billiton Hillside which were level five and level four contributors respectively.
Over the last 12 months’ Hulamin spent R2,2 billion with B-BBEE enterprises. Within this amount:
- R295 million was spent with qualifying small enterprises (QSE);
- R148 million with emerging micro enterprises (EME);
- R550 million with enterprises where black ownership is above 51%; and
- R223 million with enterprises where black woman own more than 30%.
Hulamin exceeded its internal target for 2016 of R80 million to be spent with wholly African-owned entities, with an actual spend of R95 million.
Developing Future Business, Unlocking Economic Growth
Hulamin’s objective is to facilitate the development of sustainable businesses that will create jobs and add stimulus to the economy. Hulamin provides opportunities to new enterprises and supports small, medium and micro enterprises through professional, financial and logistical support coupled with start-up support services.
In 2016, African-owned enterprises supported by Hulamin employed 350 workers on a permanent basis which is a further 18% of Hulamin’s employment complement.
Hulamin helped 18 SMMEs attain ISO 9001: 2015 quality assurance certification. All these enterprises are suppliers to Hulamin.
Hulamin scored maximum points in enterprise development through initiatives such as:
- Favourable payment terms granted to emerging enterprises;
- Monetary and non-monetary support for black enterprises; and
- Management time devoted towards various elements of enterprise development
Aluminium Beneficiation Initiative
Hulamin and South 32 collaborated to form the Aluminium Beneficiation Initiative (ABI) to focus on developing and supporting high level entrepreneurs in aluminium fabrication or beneficiation. A key objective of ABI is to grow the local market usage of aluminium.
ABI has identified 102 entrepreneurs throughout South Africa who have potential to grow the downstream sector.
ABI and the Korean Trade and Investment Agency (KOTRA) led a group of 12 entrepreneurs to participate in KOTRA’s Small to Medium Plant Business Meeting (SMPBM 2016) in Seoul in April 2016. SMPBM 2016 was hosted and attended by the Korean Ministry of Trade, Industry and Energy officials. The objectives of the trade mission were to:
- Facilitate business networks for ABI members seeking to source plant, machinery and equipment from Korean suppliers;
- Gain exposure to advanced manufacturing technology and facilitate technology transfer; and
- Promote the aluminium industrialisation through exposure to best manufacturing experience and best practise.
Korean enterprises are internationally recognised for their innovative and state of the art business practices. They welcomed the opportunity to work with and contribute towards ABI’s goal of creating sustainable aluminium fabrication enterprises. Major successful companies out of South Korea include: Samsung, Hyundai, Kia, Daewoo and Doosan.
ABI members participated and they met over 37 Korean machinery and equipment suppliers. Three ABI members are negotiating Aluminium fabrication machinery procurement estimated at $500 000 from Korea.
The usage of aluminium in the automotive sector is set to increase significantly in the future. During July 2016, two seminars were held in Durban and Johannesburg to assist the entrepreneurs that are pursuing aluminium beneficiation opportunities in this sector. 40 entrepreneurs attended these seminars.
ABI arranged two workshops on business plans that were attended by 45 entrepreneurs in Pietermaritzburg and Boksburg during July 2016.
The Industrial Development Corporation subsidiary, Small Enterprises Financial Agency, has earmarked R100 million for ABI entrepreneurs who require funding for their beneficiation projects. To date just over R10 million has been disbursed and a number of projects are currently under review.
See online sustainability report for more detail on each aspect of social, relationship and intellectual capitals.