Aluminium will bounce back prediction

HIGH energy costs and low prices have brought dark days to the aluminium industry, but South32 Vice President Noel Pillay forecasts brighter days ahead.

Speaking on Wednesday at an international conference in Cape Town, hosted by Aluminium Federation of South Africa (AFSA), Pillay said Richards Bay’s Hillside Plant, the largest smelter in the southern hemisphere, remains one of the world’s most efficient plants using Pechiney (electrolysis) technology.

‘We meet during a particularly challenging time for our industry and the broader resources sector globally.

‘But if you are in the mining industry and have been around for a while, you will know that the cycle will turn.

‘I am not sure how long this will take, or whether we have reached the bottom yet, but our product – the green metal – is needed in the new world.

‘South32 is already adopting a more flexible approach to conducting our business and we are committed to constructive and long-term partnerships with our custodian governments.’

Pillay highlighted the importance of support from the Department of Trade and Industry (DTI).

‘DTI has taken the lead in developing and promoting the Industrial Policy Action Plan as a key Government initiative.

‘It is no exaggeration to say that DTI’s support through programmes such as the Preferential Procurement Policy Framework Act for designated products, the Preferential Price System for scrap metal and the Automotive Production and Development Programme for the automotive sector guarantee a healthy future for our industry.’

Power is the problem

However, energy remains a crippling hurdle for the electricity intensive sector.

‘The larger aluminium smelters (Hillside and Mozal) were built in an era when Eskom had excess capacity.

‘They have played an important role in the industrialisation of our country over the last 40 years and have a solid track record of supporting the downstream aluminium industry.

‘We are confident that the smelters will continue to contribute positively to the South African economy.

‘But we face a number of challenges around power supply and electricity prices in our region.

‘The cost of a new build programme has also led to rapidly increasing electricity prices, with the result that South Africa has lost the advantage of being a ‘low cost power’ producer.

‘Our power prices are rising at rates higher than our competitor countries, which is unsustainable.’