The Pietermaritzburg-based rolled products and extrusions business believes it can source up to 25% of its metal inputs from recycled metal, claiming that it plans to exploit the estimated 10kt to 15kt of used beverage cans (UBCs) and up to 15k of ‘class scrap’ (can maker skeletons and other plant scrap) currently available in South Africa. The scrap in questions has an estimated market value of R800m ($78m) in aluminium content.
The company has extended its slab contract with the Bayside smelter in Richards Bay to March 2014 and its melting ingot supply deal with Hillside until 2015. The company also buys extrusion billet from the Middle East.
While Hulamin has a long way to go before it can emulate the USA-based Novelis, South Africa already has a high recycling rate for UBCs and a 2017 target of 70%. However, it is argued that a UBC/scrap infrastructure needs to be developed in the country, plus substantial investment by Hulamin, before its’ recycling ambitions can be truly realized.
Furthermore, the company will need to invest R200m ($00) in production facilities, which equates to 15% of its market capitalization.
Last November (2012) Hulamin was awarded a supply agreement with Nampak, a leading South African packaging company, for the supply of 28kt of aluminium can body stock, which extends to 2015. The deal accounts for 40% of Nampak’s can stock requirements. The supply deals starts in September and Hulamin hopes to eventually supply 100% of Nampak’s business.