Power woes may hurt Hulamin

Johannesburg - Aluminium processor Hulamin has said that while it was implementing a range of electricity saving measures, it is possible that current load shedding and related disruptions may impact on sales this year.

"Hulamin has experienced increased daily load shedding in recent weeks," Hulamin chairman Mafika Mkwanazi told those attending the company's annual general meeting.

"In line with the national imperative, the company has implemented a range of actions to reduce its consumption of electricity in line with national targets," Mkwanazi said, adding that these measures were resulting in reduced electricity consumption.

But he warned that the company might not escape unaffected.

Developing plans

Hulamin has also ensured that most of the additional energy requirements for its R950m expansion will be satisfied by using liquefied petroleum gas as opposed to power from the national grid.

"Infrastructure and project approvals were in place for the electricity requirement for the project, which falls within Hulamin's existing notified maximum demand," Mkwanazi said.

"Notwithstanding this, Hulamin is developing plans to reduce the additional electricity requirement for the expanded facilities in line with the 10% reduction," he added.

The expansion project was approved by the Hulamin board in October 2006 to increase rolled products capacity by 20% to 250 000 tons per annum and to enable further improvement in product mix.

Expansion project benefits are expected to start coming on stream from 2009, said Mkwanazi, who said the project was progressing very well.

On schedule

He said the project remains on schedule and within budget, in spite of significant inflationary pressures and skills shortages.

Contracts amounting to 80% of the total R950m have been awarded and 750 contract project workers are now on site with total hours worked now exceeding one million.

Mkwanazi said that export sales had benefited from movements in the rand exchange rate, and the company's rolled product margins were exceeding expectations as the business continued to improve its mix of high value products and pursued more direct routes to certain markets.

"These factors are expected to more than compensate for the effects of load shedding and increases in input costs that are occurring in the current inflationary environment," he said.

At 12:30 shares in Hulamin were 1.55%, or 40c, lower at 2 535c on the JSE.

- I-Net Bridge

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