JOHANNESBURG (miningweekly.com) – Industry players and government say they are committed to growing the aluminium industry despite harsh times for the sector caused largely by very depressed aluminium prices.
 
“Aluminium prices have remain depressed, arguably the lowest in our history. Supply and demand is out of kilter and cost cutting has been necessary to remain in business,” global mining company South32 VP of operations Noel Pillay said on Wednesday.
 
He told the International Aluminium Conference in Cape Town that, while retrenchments and budget cuts had become “the order of the day” in the industry, South32 was fully committed to playing a more active role in South Africa and growing its downstream business. It planned to deepen its relations with industry stakeholders, government and community players in order to achieve this.
 
Based in Richards Bay, South32’s liquid aluminium producing facility is the largest smelter in the southern hemisphere.   
 
 Pillay focused strongly on the critical need for reliable energy.
 
“Fundamental to the survival of this industry is reliable, continuous and cost-effective power.”
 
With power prices rising rapidly, he said South Africa had lost the advantage of being a low-cost power province internationally.
 
“Unfortunately, our power prices are rising at rates higher than our competitor countries, which is unsustainable. This obliges all of us to work with government and Eskom to mitigate this impact.”  
 
The Aluminium Federation of South Africa (AFSA) had proposed a study that would see government and aluminium players articulate the potential opportunities in creating an integrated South African aluminum industry, based on local downstream beneficiation and expanding export potential, especially into Southern Africa.
 
Pillay said the industry had been proactive in making big changes in recent years and was optimistic that it could find proactive solutions to the current impasse.
 
“As recently as a few years ago, it was illegal to move liquid metal on public roads. Working with key stakeholders, we’ve managed to unlock that. Today we move an annual equivalent of 100 000 t of liquid metal on our roads.”
 
Department of Trade and Industry (DTI) metal fabrication, capital and rail transport infrastructure chief director Thandi Phele said the department wanted to grow the downstream sector of the industry, which had created 15 000 direct jobs in South Africa.
 
But she also outlined how subdued economic prospects were putting the mining industry under tremendous pressure, with knock-on effects for manufacturing.
 
“Cost pressures from electricity, distorted market forces and the crippling of competitiveness of the industry have led to closures and job losses. According to AFSA, 1 500 jobs have been lost in smelters and other plants.”
 
Despite this, Phele said there was great potential moving forward. The government had put industrialisation at the heart of its growth and development policy.
 
She saw great scope in the transport and automotive industry, as consumers moved to lightweight motor vehicles to decrease carbon emissions.
 
“The automotive industry will remain the main driver for aluminium in the future.”

Phele said the automotive industry was expected to produce 1.2-million units by 2020.
 
There was also opportunity in the renewable-energy space, while the DTI envisaged reopening production lines to supply the needs of downstream industries.
 
The department also hoped to boost the foundry and tooling industries to produce toolings, castings and forgings to improve the manufacturing sector.
 
Phele called on the industry to raise its overall competitiveness and preserve and create decent employment.
 
“We have supported the industry but we require reciprocal commitments. Industry needs to become innovative, embrace technology and increase lean manufacturing processes to be able to compete effectively in the aluminium space.”