JOHANNESBURG (miningweekly.com) – The world’s biggest mining company BHP Billiton has agreed a R10-billion, five-year liquid metal supply contract with a black-controlled consortium in a transaction that gives the South African aluminium industry a shot in the arm.

The diversified major, which is in the process of demerging its South African aluminium, manganese and coal assets into a separate new company (Newco) that will be listed in Australia, South Africa and Britain, said on Monday that it had reached a definitive agreement to sell its Bayside value-added-product casthouse in Richards Bay, KwaZulu-Natal, to Isizinda Aluminium, a majority owned, broad-based black economic-empowerment consortium. (Also watch attached video).

The transaction also takes in the unprecedented supply of metal in liquid form, 17 hectares of land for future expansion into an aluminium downstream hub, equipment and the buildings associated with the casthouse, which is guaranteed 96 000 t of liquid aluminium a year to be transported from Newco’s Hillside smelter to the Bayside casthouse nearby for the next half decade.

Isizinda Aluminium, headed by CEO Sizwe Khumalo, has, in turn, concluded a slab supply agreement with the JSE-listed Hulamin, South Africa’s leading aluminium semis fabricator, which has a strategic partnership with Bingelela Capital, which owns 60% of Isizinda and Hulamin the other 40%.

“We’re well placed to further develop the aluminium beneficiation in South Africa,” Khumalo, a 47-year-old chemical engineer, told Mining Weekly Online.

Isizinda is evaluating further phases of development to expand the casthouse beyond the current 96 000 t of aluminium slab a year with other value-added products that could include extrusion billet, rods, wires, rim alloys, slugs and a dross plant.

The 100%-black-owned Bingelela Capital comprises four empowerment groupings with a 52% female shareholding.

The transaction, which must still secure a regulatory nod, is expected to be completed before June.

Following BHP Billiton’s closure of the Bayside smelter, the casthouse continued to operate with the supply of liquid metal from the nearby Hillside smelter.  

Expansion of the casthouse beyond its current capacity is being studied to create a larger downstream aluminium industry within South Africa.

If progressed, such projects are expected to come into fruition over the next few years and would be beneficial for the downstream aluminium industry and the Richards Bay economy.

Hulamin, which is headquartered in Pietermaritzburg, is currently the casthouse’s biggest customer.

Newco, of which Hillside forms part, will have 12 assets in five countries and 24 000 employees and contractors.

Many of the assets selected for the new company operations are among the most competitive in their industries, said Newco CEO-elect Graham Kerr, who spoke in the company of BHP Billiton aluminium asset president  Lucas Msimanga, Bingelela Capital's Zodwa Manase and Hulamin acting CEO David Austin.

Besides BHP Billiton’s integrated aluminium business in South Africa, Mozambique and Australia, Newco also takes in manganese and energy coal in South Africa, metallurgical coal in Australia, nickel in Colombia and silver in Australia.