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Johannesburg - BHP Billiton [JSE:BIL] has reached a definitive agreement to sell its Bayside value added product (VAP) casthouse in Richards Bay to Isizinda Aluminium, a majority owned, broad-based black economic empowerment consortium.
The transaction is aimed at bolstering the economic transformation of Richards Bay and development of South Africa’s downstream aluminium industry
The transaction includes the sale of the Bayside VAP casthouse, a R10bn liquid metal supply contract, 17 hectares of land, equipment and the adjacent buildings associated with the casthouse.
The transaction is subject to regulatory approval and other customary conditions and is expected to be completed in the first half of 2015.
Upon completion of the transaction, and following the closure of the Bayside smelter earlier this year, BHP Billiton will no longer produce aluminium from Bayside.
The agreement was signed by Graham Kerr, CEO elect of the new company, which would be created by BHP Billiton’s proposed demerger. BHP Billiton’s integrated aluminium business has been selected for inclusion in the new company.
“The sale of the casthouse to Isizinda Aluminium reflects our vision to grow the downstream aluminium industry in South Africa and to contribute to the transformation of the economy of Richards Bay," said Kerr.
"We recognise the importance and significance of this agreement and are committed to working hard to fulfil our obligations for the success of the downstream aluminium industry.”
The landmark sale of the casthouse follows the closure of BHP Billiton’s Bayside smelter in June 2014. Following the closure of the smelter, the casthouse continued to operate with the supply of liquid metal from the nearby Hillside smelter.
The agreement with Isizinda Aluminium involves the continuous supply of 96 000 tonnes of liquid metal per annum for a period of five years from the adjacent Hillside smelter to the Bayside VAP casthouse.
Both parties are actively studying the potential for expansion of the VAP casthouse beyond its current capacity 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.
“In line with our commitment to transformation and empowerment, and our recognition of the critical importance of the VAP casthouse as a downstream operation, we believe the composition of the successful Isizinda Aluminium consortium is ideal,” said Kerr.
Isizinda Aluminium brings together Bingelela Capital (60%) and Hulamin (40%) and was selected as the successful bidder following a competitive bidding process.
Bingelela Capital comprises four 100% black-owned companies and has 52% female representation.
JSE-listed Hulamin, which is headquartered in Pietermaritzburg, is currently the casthouse’s biggest customer and is the largest semi-fabricator of aluminium products in Southern Africa.
“We recognise the importance and significance of this agreement and are committed to working hard in fulfilling our obligations as required for the success of this agreement, and which is in line with our vision for the sustainability and growth of the downstream aluminium industry,” said Kerr.
