Hulamin looks at recycling

2013-04-16 00:00

HULAMIN, one of the largest employers in Pietermaritzburg, may not make any more large investments in the city for the immediate future, and it’s next big project may go to Richards Bay or Midrand.

This was what CEO of Hulamin Limited, Richard Jacobs, indicated at a recent PCB Leadership Network presentation on the past, present and future of Hulamin and Pietermaritzburg.

Close on the heels of Hulamin’s notice to workers in March of impending retrenchments, Jacobs indicated that Pietermaritzburg could not look forward to continued investment in the city at the levels it has become used to in recent years.

Hulamin invested R2,4 billion in a rolled product expansion facility in the city in 1996, followed by a R75 million expansion to its plate plant in 2006, and then a R950 million second-phase expansion of its rolled product plant in 2009.

“The likelihood of Hulamin investing like this again [in Pietermaritzburg] is low, in the short to medium term,” said Jacobs.

Although he said Hulamin would not be leaving the city — the company pays R636 million per annum in salaries to 1 800 employees in Pietermaritzburg and makes annual purchases of around R400 million in the city and surrounds — he pointed to macro issues like South Africa’s falling competitiveness globally, as well as local concerns like the cost of energy in Pietermaritzburg, as factors influencing the company’s decision not to invest in the city as it has historically.

The latter issue could also have a bearing on the company’s decision on where to locate its next large investment, a R100 to R200 million aluminium recycling plant.

Recycling of aluminium is attractive to Hulamin, explained Jacobs. The metal is 100% recyclable, and it is 20 times cheaper to recycle aluminium than it is to mine it. It is also, pound for pound, significantly more valuable than other recyclables like glass and plastic.

Jacobs outlined a vision of the future that could mean the equivalent of 2 000-plus formal and informal jobs in the aluminium recycling logistics chain, and even possible “reverse” vending machines that could take empty aluminium cans from consumers and reward them with airtime or vouchers.

The company’s recent deal with Nampak to produce 40% of its aluminium beverage can needs — within 18 months all beverage cans in South Africa will be aluminium, he said — adds weight to this vision.

“The global market for aluminium beverage cans is around 2,5 million tons,” said Jacobs, and confirmed that this was a direction the company was headed, particularly locally.

Recycling would make Hulamin less dependent on raw materials by creating a closed loop of material re-use that would require smaller inputs of raw materials.

And with the expiry of Hulamin’s long-term contract with BHP Billiton for the supply of rolling slabs, and the present uncertainty of short-term contracts with this main supplier of the raw material from which the company makes its products, recycling takes on added importance.

If BHP Billiton were to stop supplying Hulamin, the company would “probably downscale the business”, Jacobs admitted.

Jacobs said the decision on where to locate Hulamin’s new recycling plant would be made in the next 12 months, and confirmed Pietermaritzburg, Midrand and Richards Bay as the three options they are considering.

One of the problems with Pietermaritzburg, however, is the fact that it does not have a natural gas pipeline like the other two cities. The pipeline ends in Durban.

Natural gas is the primary energy source for aluminium rolling plants such as Hulamin and the company currently trucks in 100 tons of expensive liquid petroleum gas a day from Durban for its operations in Pietermaritzburg, at a cost of R230 million a year.

Although a Petronet pipeline does run through Pietermaritzburg, Hulamin does not currently have access to this line. Jacobs said they are in discussions regarding this and are hoping to have clarity on it in time for the decision on where to locate Hulamin’s new recycling plant.

Richard Jacobs

CEO, Hulamin Limited

Recycling of aluminium is attractive to Hulamin … the metal is 100% recyclable, and it is 20 times cheaper to recycle than it is to mine it.

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