Reliance and impact on key capitals > Manufactured capital

Manufactured capital

MANUFACTURED CAPITAL
   
Manufactured capital is the infrastructure, plant and equipment that we use to produce our products. It includes assets that are produced by other entities and those manufactured internally and excludes intellectual capital such as software. The management of these assets is a key business imperative and is considered an essential element in achieving manufacturing excellence and operational performance. Our high-tech, state-of-the-art rolling and semifabrication assets are central to our operations. The implementation of asset maintenance and care policies will improve asset utilisation and profitability.

MATERIAL DEVELOPMENTS
   
  • Disruptions to both electricity and gas supplies impacted negatively on manufacturing output. Production and efficiencies improved in the second half, in spite of these disruptions
  • Manufacturing output was also impacted by planned maintenance activity, plant upgrades and quality rework on two product lines in the first half of the year
  • Engineering work on the partial conversion to Compressed Natural Gas was successfully completed in 2015
  • Long-term security of local rolling slab and melting ingot has been further secured
LOOKING BACK ON OUR 2015 GOALS
   
  • Construction of the recycling centre was completed on time and within budget, in the third quarter of 2015. The facility is in the process of ramping up to full capacity
  • Manufacturing performance yield increased from 65% to 65,3%, in line with our plan to achieve our targeted 67% yield
  • Can body stock production ramp up continues in line with our targets
FOCUS FOR 2016
   
  • Continue to improve our production performance and efficiencies to reach our targeted 67% rate
  • Optimise our cost efficiency programme without hampering on targeted production and sales levels

KEY CAPITAL RELIANCES

LOCAL ALUMINIUM SMELTERS

Hillside aluminium smelter (source of primary aluminium for Hulamin’s remelt and casting operation).

BAYSIDE CASTING FACILITY

Bayside casthouse (source of one-third of Hulamin’s requirements for rolling slab for the rolling operation).

HULAMIN OPERATIONS

Remelt and casting Hulamin’s remelt operations, consist of:

  • Three slab production lines, fed by reverberatory melting furnaces, with a slab capacity of around 240 000 tons per year
  • An aluminium reclamation operation
  • Two twin roll casters, which are able to process scrap and primary metal into coil, with the capacity to produce 20 000 tons of coil per year

Rolling

Hulamin is a conventional flat rolled aluminium products producer and operates hot, cold and foil rolling mills. Finishing equipment includes coil coating lines, slitting, sheet cut-to-length lines, cleaning and tension levelling and foil finishing facilities. A state-of-the-art plate plant is equipped with a range of equipment including sawing, stretching and plate cut-to-length lines.

Extruding

Hulamin manufactures the majority of the extrusion dies for its two extrusion plants. Heated billet is placed in an extrusion press which pushes the softened metal through the die to produce the desired profile. Finishing options include powder coating, anodising and fabrication.

SCRAP PROCESSING

Hulamin operates an aluminium reclamation operation which consists of a shredding line, de-coater and induction furnace which is used to process light and coated scrap to produce aluminium sows that are fed into the three slab production lines. A R300 million investment in a scrap sorting, processing and recycling facility was approved in 2013 and went online in the third quarter of 2015. The facility was completed on time and within budget.

Asset management strategy

The purpose of the asset risk management strategy is to provide a structured approach to the implementation of an asset risk management system, based on ISO 55000 and ISO 31000 principles. Our asset management strategy is aligned with international best practice. The focus is on asset care, operation and maintenance while considering the asset performance and the effect of external factors.

Key areas of focus:

BUSINESS RISK ASSESSMENT

To identify potential assets that pose a high risk to the overall business objectives.

OPERATION TASK CRITICALITY

To determine activities related to assets that can cause harm to people and the environment while performing these activities.

EQUIPMENT CRITICALITY ANALYSIS

To identify the most significant equipment and determine the most appropriate approach to the development of maintenance tasks.

SPARES CRITICALITY ANALYSIS

To determine inventory categories and develop an approach for a specific spare or material.

ASSET ACQUISITION RISK MANAGEMENT

To determine issues that should be included in the specification of the asset such as training, integration of systems, energy considerations, critical spares and technology.

High-tech, state-of-the-art rolling and semi-fabrication assets are central to our operations

 

REPAIRS AND MAINTENANCE
R255 million
(2014: R203 million)
GROUP
PRODUCTION
199 000 tons
(2014: 214 000 tons)
  Rolled Products
180 000 tons
Extrusions
19 000 tons
ADDITIONS
R605 million
(2014: R305 million)
DISPOSALS AT COST
R104 million
(2014: R59 million)
CARRYING AMOUNT
R3 167 million
(2014: R2 697 million)

Asset care

The asset care team ensures that equipment is kept in good, functional condition and contributes to safe working conditions and prevents environmental damage.

Our dedicated asset care team is focused on furthering the:

  • Development and implementation of Asset Risk Management policies and governance
  • Development and implementation of centralised work planning and control
  • Development and implementation of improved material management systems
  • Our reliance on manufactured capital and our approach to the management thereof allow for us to extract the benefits and value of our assets.

Recycling plant

Hulamin has invested in the infrastructure needed to recycle Used Beverage Cans (UBCs) and other end-of-life and customer scrap in the most effective and environmentally responsible manner. The recycling centre is estimated to cost R300 million, which will further advance our manufactured capital. The construction of this plant was within budget and came online in the third quarter of 2015. The facility is now in the process of ramping up to full capacity.

 

Hulamin recycling centre

Construction of a new aluminium recycling plant was recently completed at Hulamin’s Camps Drift site in Pietermaritzburg. The R300 million project, that began operating in the third quarter of 2015, has been built to recycle used aluminium beverage cans (UBCs) and other forms of scrap.

The new furnace that has been installed at Hulamin’s new Pietermaritzburg recycling plant - a twin chamber Hertwich de-coating and melting furnace - is touted as one of the world’s most energy efficient and environmentally friendly ways to melt scrap. While most other furnaces would simply incinerate the cans, the new Hulamin furnace is able to remelt the thin aluminium, such as the type used in UBCs, while conserving the maximum amount of aluminium from the scrap. Volatile organic compounds present in coated beverage cans are used as part of the fuel that powers the furnace, with less processed furnace dross to landfill and fewer emissions into the atmosphere too. The plant also incorporates a UBC shredding and cleaning line, and liquid-metal transfer facilities. Using recycled aluminium in place of primary aluminium is a big part of Hulamin’s future plans. Recycling aluminium uses only five percent of the energy needed to produce primary aluminium ore.

This new recycling plant will give Hulamin the capacity to process large numbers of all aluminium beverage cans discarded by the country’s consumers into the future and this, combined with aluminium’s high value, low cost of recycling and its ability to be 100% recyclable, means that used aluminium beverage can recycling holds great promise for the company.


STRATEGIC ASSET BASE

The strategic assets of Hulamin can be separated into three key areas of which all are important to the overall state-of-the-art facilities that contribute to produce our products.

GROUP ASSETS   HULAMIN ROLLED PRODUCTS
icon REMELT AND CASTING EQUIPMENT
Melting and holding furnaces are used to melt and blend primary aluminium, alloying elements and scrap aluminium. The casting launder and moulds are used to solidify the molten aluminium into rolling slab. There are three slab production lines with a capacity of 240 000 tons per year.
  icon MILLS
Hulamin has state-of-the-art rolling mills, which roll the slab into coils. The hot mills roll heated slab, substantially reducing it thickness and multiplying its length by up to 24 times. The cold mills further roll the hotrolled coils to achieve the required gauges and properties.
icon RECYCLING PLANT
Coated and painted scrap is also processed via the aluminium reclamation operation which consists of a shredding line, de-coater and induction furnace. The processed scrap is fed into the slab production lines above.
  icon PLATE PLANT
The aluminium plate plant is a technologically advanced process that includes heat treatment, sawing, stretching and cut-tolength lines.
icon INFRASTRUCTURE
Buildings, roads, pipelines and other services essential for production.
  icon SLITTERS
These items of equipment form part of the finishing processes. These high-tech machines allow for a high-quality product that meets customers’ specific needs.
icon STRATEGIC SPARES
Spares, which are essential to production, are on hand in the event of breakdowns and urgent repairs.
  icon COATING
Coils can be coated with paint or lacquer using rollers and then oven-cured. The coil coating process is designed to ensure highly consistent quality.
HULAMIN EXTRUSIONS
EXTRUSIONS
Billet presses push softened metal through dies to create desired profiles, which are then finished by either coating, anodising or fabrication. Hulamin has two extrusion plants, both of which boast these advanced technologies.