Governance and leadership > Risk management

Risk management


The employment of an effective risk management process is critical to Hulamin achieving its strategic and operational goals, particularly in the current environment of change and uncertainty.

Hulamin recognises that risk is intrinsic to the business and that there is a balance to be struck between managing risk and exploiting opportunities. The group’s response to identified risks includes acceptance, avoidance, transfer and mitigation, as informed by the group’s risk appetite and tolerance levels.

It is Hulamin’s policy that risks should be understood and managed through a relevant and formal structure to facilitate the achievement of the business’ long-term objectives, which objectives recognise the interests of all stakeholders in the business. The formal structure assists in:

  • Identifying and evaluating risks
  • Setting acceptable risk limits
  • Monitoring risk management actions and controls
  • Assessing the effectiveness of risk management.


Hulamin’s risk management framework provides the basis for the implementation of a consistent, efficient and economical approach to identify, evaluate and respond to key risks that may impact Hulamin’s objectives. The framework also addresses the specific responsibilities and accountabilities for the Enterprise Risk Management (ERM) process and the reporting of risks and incidents at various levels within Hulamin. The framework, which is based on the ERM framework published by the Committee of Sponsoring Organisations (COSO) of the Treadway Commission, assists Hulamin with the aligning of its risk appetite and strategy; pursuing business objectives through transparent identification and management of acceptable risk; prioritising risks to ensure that resources and capital are focused on high-priority risks faced by the group; enhancing risk response decisions; reducing operational surprises and losses; identifying and managing multiple and cross-enterprise risks; seizing opportunities; improving allocation and deployment of capital; ensuring compliance with laws and regulations; and increasing the probability of achieving objectives.


  • The board of Hulamin is ultimately responsible for the governance of risk of the group and assumes overall ownership thereof.
  • The board carries out its responsibilities for risk management via the Risk and Safety, Health and Environment (SHE) Committee which has oversight of the group’s enterprise risk management framework, policy and processes.
  • There is also a Hulamin Risk Management Committee, a sub-committee of the Hulamin Executive Committee, which together with the Hulamin SHE Committee, is accountable to the Risk and SHE Committee for designing, implementing and monitoring the process of risk management and integrating risk management into the day-to-day activities of the various departments.
  • The Hulamin Executive Committee, supported by management, supports Hulamin’s risk management philosophy; promotes compliance with the risk appetite; identifies, assesses and manages risks within their spheres of responsibility consistent with risk appetite and tolerances; and manages the implementation of risk reduction actions and appropriate internal controls.
  • All Hulamin employees are responsible for executing enterprise risk management in accordance with established directives and protocols.
  • A number of external stakeholders often provide information useful in effecting enterprise risk management, but they are not responsible for the effectiveness of Hulamin’s enterprise risk management.
  • Various external and internal parties provide risk assurance and compliance


The Risk Management Committee conducts a formal review of the most significant risks and the group’s responses to these risks three times a year. These are reviewed by the Risk and SHE Committee three times a year.

The key strategic risks of the group, extracted from the group risk register, are shown in the table here. These risks have been assessed according to materiality and likelihood on an inherent and residual risk basis.


The Hulamin board is responsible for establishing and maintaining an effective system of internal control which is designed to provide reasonable assurance that the group’s business objectives will be achieved in accordance with the group’s risk appetite.

A key element of the system of internal control is the review by assurance providers who assess the adequacy and effectiveness of the controls.

The group’s internal audit function is responsible, inter alia, for the following:

  • Effectiveness of internal financial controls: Internal audit provides a written statement annually to the Audit Committee on the effectiveness of the systems of internal financial control
  • Effectiveness of internal controls and risk management: Internal audit provides a written statement annually to the board on the effectiveness of the systems of internal control and risk management.

Specialist assurance providers are used to assess the adequacy and effectiveness of controls in certain instances. These include environmental and safety audits. The output of the risk management process, in conjunction with the work of the independent assurance providers, indicates to the directors that the controls in place are adequate and effective.

This assurance recognises that the organisation is dynamic and that at any point in time there are new areas of risk exposure which may require management attention. As such, there is a continual focus on ensuring that the control environment is understood and maintained at the required level. Assurance efforts are documented in the combined assurance plan.


Profitability of current high margin export products declines as a resultof increase in supply by existing and emerging competitors from low-cost jurisdictions

  • Monitor competitor actions
  • Pursue manufacturing excellence and low costs
  • Optimise production mix and entrench positions in profitable market sectors
  • •Continue with progress up the profitability curve and new product
  • development
  • Develop local and regional sales, including the promotion of local market
  • OEM type products, e.g. can body stock

Security of supply and pricing of local melting ingot

  • New four year supply contract concluded with South32
  • Ongoing engagement with relevant stakeholders to promote the value
  • of the aluminium industry to the local economy
  • Promotion of, and investment in, recycling of beverage cans
  • and other products
  • Establish alternative suppliers and qualify key products
Security of supply and pricing of gas
  • LPG is now sourced from two local refineries rather than one
  • Supplies of imported LPG have been contracted in advance
  • Conversion from LPG to CNG has begun and will provide 40% of
  • requirements in the future
  • Additional storage facilities are being investigated
  • Continue to pursue conversion of DJP (Durban-Johannesburg Pipeline)
  • to carry natural gas to PMB
  • Actively monitor development of gas resources in South Africa

Deterioration of the economic climate and associated geopolitical uncertainty may lead to a ratings downgrade making finance harder to secure and more expensive

  • Committed working capital funding facility has performed well and
  • negotiations are proceeding to extend facilities for another three years
  • Heavy capital expenditure programme over the last two years has been
  • completed
  • Focus on reduction in working capital with lower inventory and debtor
  • balances
  • Expanding local market sales will shorten the cash cycle
  • A weaker Rand benefits revenue generated from export sales
  • All foreign currency transactions are hedged

Failure of climate-change mitigation and adaption contributing to water scarcity impacting on the ability of industry to produce

  • Projects to reduce water consumption in all cooling towers
  • Increase the water storage capacity on site
  • Investigation in the use of recycled water on all manufacturing sites
  • Engaged the services of the NCPC (National Cleaner Production Centre)
  • to get a sponsored water efficiency programme running on site

Use by governments of market-based instruments, such as carbon taxes, to induce behavioural changes that contribute to lower GHG emissions

  • Ongoing engagement with relevant stakeholders to promote the value
  • of the aluminium industry
  • Engagement with government regarding an appropriate approach to the
  • levying of carbon tax on the aluminium industry
  • Ongoing efforts to increase Hulamin’s use of third-party scrap inputs in
  • place of primary aluminium
  • Ongoing efforts to reduce Hulamin’s electricity and gas consumption
Electricity supply disruption
  • Installed backup generators to accommodate possible future load shedding
  • Developed demand reduction operating plan to minimise production losses
  • Work closely with Eskom to ensure Hulamin has as few disruptions as possible
Long-term Rand overvaluation
  • Grow local market users of Hulamin’s product
  • Ensure Hulamin is competitive through driving:
    • Most profitable production mix
    • Maximisation of sales volumes
    • Ongoing reduction of cost and improvements in efficiency
    • Development of world-class capability

Increase in competition in local market from imports

  • Focus on developing OEM market sectors in South Africa,
  • particularly can body
  • Apply for and actively promote tariff protection in local market
  • Enhance non-tariff barriers where possibl

Strategic objectives key