SILVER LINING Companies, page 19
Hulamin’s stock surges on news of deal to buy BHP Billiton’s casthouse
HULAMIN surged after South Africa’s biggest aluminium-product maker said it was part of a group that would buy BHP Billiton’s casthouse at the Bayside smelter, which had been earmarked to close.
The company will have a 40 percent stake in Isizinda Aluminium, while Bingelela Capital, a group of black investors, will own the rest, Hulamin said yesterday.
The manufacturer would operate the casthouse from which it would source more than R10 billion of aluminium slab over the next five years, it said.
This involves a continuous supply of 96 000 tons of liquid metal per annum for a period of five years.
The agreement “will secure our rolling-slab supply from Bayside for the next five years. It will also see the creation of an aluminium hub in Richards Bay,” Hulamin said.
Stock rallied as much as 9.6 percent, the biggest intraday gain since May 12, to R7.40. By 9.09am in Johannesburg, with more than 352 000 shares traded, or 28 percent higher than the daily average over the last three months.
The sale of the casthouse follows the closure of BHP Billiton’s Bayside smelter in June.
Following the closure of the smelter, the casthouse continued to operate with a supply of liquid metal from the nearby Hillside smelter.
Global aluminium capacity closures might reach 2 million tons this year, the equivalent to 4 percent of global production, Bloomberg Intelligence said in an October 10 report.
BHP will supply the Bayside casthouse from the nearby Hillside smelter.
The government wants more of the country’s raw materials processed locally by blackowned companies in a process known as beneficiation.
BHP said in a statement yesterday that the sale included the Bayside VAP casthouse, a R10bn liquid metal supply contract, 17 hectares of land, equipment and the adjacent buildings associated with the casthouse.
It added that upon the completion of the transaction, BHP Billiton would no longer produce aluminium from Bayside.
Graham Kerr, the chief executive elect of the new company from a demerger, said the sale reflected the company’s vision to grow the downstream aluminium industry in the country. “We recognise the importance and significance of this agreement and we are committed to working hard to fulfil our obligations for the success of the downstream aluminium industry.”
Both parties were busy studying the potential for the expansion of the VAP casthouse beyond its current capacity to create a larger downstream aluminium industry.
If successful, such projects are expected to come into fruition over the next few years, and be beneficial for the downstream industry and the Richards Bay economy.
Shares closed 3.11 percent higher at R6.96 yesterday.
Graham Kerr, the chief executive-elect of BHP’s proposed demerged vehicle, and Sizwe Khumalo, the chief executive of Isizinda Consortium, shake on a five–year metal supply deal.