SIL­VER LIN­ING Com­pa­nies, page 19

Hu­lamin’s stock surges on news of deal to buy BHP Bil­li­ton’s cast­house

The Star Early Edition - - BUSINESS REPORT - Bloomberg and Nom­pumelelo Mag­waza

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.

PHOTO: SIM­PHIWE MBOKAZI

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.

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