The proposed acquisition of diversified mining and metals company South32’s aluminium assets in Australia, Brazil and South Africa by global aluminium corporation Alcoa is a key development, particularly for primary metal production, says trade association Aluminium Federation of South Africa (AFSA).

“On July 1, South32 signed a binding conditional agreement to sell its aluminium value chain assets, including the Hillside Aluminium smelter in Richards Bay to US-based Alcoa in a transaction valued at up to $5.6-billion,” says AFSA CEO Muzi Manzi.

The deal is expected to close in the first half of 2027, subject to South32 shareholder and regulatory approvals. If completed, Hillside will form part of a larger international group with operations across Australasia, the Americas, Europe and Africa, he adds.

For Alcoa, the acquisition creates mine-to-metal at scale and “an entry point into South Africa through a globally competitive aluminium smelter”, Alcoa CEO Bill Oplinger said at the time.

Importantly, Alcoa stated that its acquisition of Hillside will keep South Africa’s only primary aluminium smelter operating, despite energy challenges.

Aluminium producer Hulamin, meanwhile, is progressing with its upgrade of its S4 cold rolling mill, with engineering partner Primetals Technologies’ hot-edge inductor technology set to improve Hulamin’s strip quality.

Manzi notes that liquid-metal deliveries from Hillside to local producers such as Hulamin and Bingelela Alloys are being scaled toward a target of 240 000 t/y, which supports a stronger domestic value-added product base.

He cites Hulamin’s renewed focus on higher- value can-body stock and automotive sheet and Wispeco’s anchoring the extrusion segment with products for architectural, industrial, solar and transport applications, as examples of this “stronger product base”.

Positioning Globally

Manzi notes that South Africa’s competitive position draws on a combination of factors: a deep-water port at Richards Bay, a large-scale primary smelter producing high-purity metal, and an established downstream base.

“The local industry is also trying to reposition itself as a regional beneficiation hub under the African Continental Free Trade Area Agreement,” notes Manzi, adding that the emphasis is to shift towards supplying semi- fabricated and finished aluminium products into neighbouring countries’ automotive, construction, packaging and infrastructure value chains.

Meanwhile, low-carbon and “green aluminium” production is becoming a market differentiator globally. As Hillside currently draws power from a coal-heavy grid, its Scope 2 emissions profile is relatively high by global standards. Further reducing that intensity is no longer only a sustainability objective, it has also become a market-access and competitiveness issue, states Manzi.

However, steps are being taken to address these concerns, with Manzi citing a joint statement by South32 and State-owned power utility Eskom in April, which confirmed “advanced discussions” on a new long-term electricity solution for Hillside ahead of the current supply agreement’s expiry in 2031, with the objective of a viable low-carbon pathway underpinned by renewables.

Moreover, the broader aluminium industry is also exploring technology adoption to improve efficiency and sustainability, including renewables integration and recycling systems. Traceability and carbon-accounting systems are also becoming more important as exporters respond to stricter international regulations and shifting customer expectations.

Navigating Challenges

Manzi maintains that local producers are responding to input-cost volatility and infrastructure constraints by improving efficiency and restructuring operations.

The government has also acknowledged that primary smelting is a globally mobile activity competing on electricity price and reliability.

Speaking earlier this year on a revised electricity pricing policy for industrial users, Electricity and Energy Minister Dr Kgosientsho Ramokgopa stated that the joint ferrochrome intervention – agreed to by the national energy regulator, Eskom and two key ferrochrome producers – could be a “game changer” for the economy as it provides an avenue for competitive metals production.

“We are designing a solution for this industry and, when it works – not if – we will roll out the template across the country,” he said at the time.

The policy shift provides a credible pathway to address the single most important determinant of primary smelting competitiveness: electricity prices. Combined with Richards Bay’s logistics platform, an expanding renewable-energy pipeline, and an established downstream base, the emerging framework strengthens South Africa’s case both to retain existing capacity and to attract new primary and secondary aluminium investment over the medium term, adds Manzi.

Regarding employment, Manzi notes that, aligned with AFSA’s revised 2024 South African Aluminium Industry Master Plan, by applying the assumed 4.6% compound annual growth rate for aluminium consumption to the industry’s 2017 baseline of 11 600 direct jobs and 28 900 indirect jobs, the industry, in 2026, accounts for roughly 17 400 direct jobs and 43 300 indirect jobs.

“That implies an increase of roughly 5 800 direct jobs and 14 400 indirect jobs over the period, driven primarily by beneficiation, recycling, semi- fabrication and the wider build-out of local components manufacturing.”

He adds that packaging remains an important demand driver, with the South African metal packaging market estimated at about $1.06-billion in 2026 and projected to reach $1.27-billion by 2031, with beverage cans accounting for most of that growth.

Taken together, these dynamics point to a sector positioned to translate its primary-metal base into a broader, higher- value and more employment- intensive industrial footprint over the second half of the decade, he concludes.