Smelter al­lays re­trench­ment fears

Zululand Observer - Weekender - - ZO NEWS - Gugu Myeni

SOUTH32 has al­layed con­cerns of pos­si­ble re­trench­ments at the Hill­side Smelter in Richards Bay as part of cost cut­ting mea­sures.

The com­pany said the fi­nan­cial man­age­ment ini­tia­tives cur­rently be­ing un­der­taken at the smelter are in line with nor­mal busi­ness prac­tices in or­der to re­main sus­tain­able through­out com­mod­ity price cy­cles.

The Zu­l­u­land Ob­server is in pos­ses­sion of a let­ter handed to staff mem­bers stat­ing plans to freeze 17 va­can­cies with an equiv­a­lent mon­e­tary value of R13.6-mil­lion in or­der to sup­port the com­pany’s fi­nan­cial sus­tain­abil­ity and cost sav­ing goals.

How­ever a com­pany spokesper­son said de­spite cost chal­lenges, Hill­side ex­pects to achieve a record pro­duc­tion of 720kt of alu­minium in the fi­nan­cial year end­ing 30 June 2019 as it con­tin­ues to test its tech­ni­cal ca­pa­bil­ity.

‘Our South Africa Alu­minium busi­ness which con­sists of the Hill­side Alu­minium smelter in Richards Bay, has a highly vari­able cost base which is heav­ily in­flu­enced by the price of power and raw ma­te­ri­als.

‘Op­er­at­ing unit costs in­creased by 26% in the fi­nan­cial year end­ing 30 June 2018 ow­ing to a sig­nif­i­cant rise in raw ma­te­rial costs.

‘South32 achieved record pro­duc­tion at Aus­tralia Man­ganese and Mozal Alu­minium, de­liv­er­ing a 10% in­crease in to­tal man­ganese ore pro­duc­tion and a 20% in­crease in payable nickel pro­duc­tion at Cerro Matoso.

‘The fully in­te­grated alu­minium sup­ply chain ben­e­fit­ted from tight mar­kets by virtue of the pre­dom­i­nantly in­dex-linked 3.2 mil­lion tonne long alu­mina po­si­tion.

‘We ex­pect Hill­side’s raw ma­te­rial costs to re­main el­e­vated in the cur­rent fi­nan­cial year.’

The spokesper­son said Hill­side man­age­ment will how­ever, con­tinue to look for op­por­tu­ni­ties to man­age and im­prove its prof­itabil­ity.

‘The smelter re­mains a key con­trib­u­tor to lo­cal com­mu­nity de­vel­op­ment, skills de­vel­op­ment and en­trepreneurial sup­port, in­clud­ing small busi­nesses in our sup­plier pipe­line,’ the spokesper­son said.

South32 Hill­side Smelter in Richards Bay

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