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Alcoa sees South Africa's Hillside Aluminium being 'cash flow accretive immediately'
Episode 37
Published 1 week, 1 day ago
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This asset adds scale to our smelting portfolio in a way that is expected to be cash flow accretive immediately, Alcoa Corporation President and CEO William (Bill) F Oplinger said of South Africa's Hillside Aluminium smelting business during a conference call following the NYSE-listed company's announcement of the aluminium-linked assets of the Johannesburg Stock Exchange-listed South32.
"We think we're acquiring fantastic long-term assets at a really reasonable price," Oplinger said during question time in reply to Citi Investment Research analyst Alex Hacking.
In addition to Hillside and the idled Bayside smelter property in South Africa's KwaZulu-Natal province, Alcoa will acquire South32's interests in the Boddington bauxite mine and the Worsley alumina refinery in Western Australia; and the Mineração Rio do Norte bauxite mine and the Alumar alumina refinery and aluminium smelter in Brazil.
In 2025, Hillside generated about $2-billion of revenue and $200-million of earnings before tax depreciation and amortisation, and in the current pricing environment is delivering strong cash generation, Oplinger added during the call covered by Mining Weekly.
"Hillside does introduce a new geography for Alcoa, but from a technical standpoint, it uses the same AP 30 smelting technology that we've operated for decades at two of our smelters," Oplinger pointed out.
Through Hillside, Alcoa is adding "meaningful volume and cash flow generation" and expanding its Africa footprint.
The smelter's production has been stable and predictable over the past five years, which the Pittsburgh-based Alcoa views as an important indicator of operational reliability and downside resilience.
In response to Hacking and also to Independent Research analyst John Tomaso regarding Hillside's electricity contract and its duration, Oplinger expressed strong positivity.
"The Hillside power contract runs through to 2031 so it's got a strong power contract today. We're confident that we'll be able to repower the Hillside smelter very effectively, and clearly, we'll start working on that towards the end of the decade."
In January, Mining Weekly reported that studies being undertaken on Hillside's future power source beyond 2031 have been taking place amid awareness of the different energy levers that can potentially be pulled.
The current power agreement is providing useful time to scrutinise power options during a period when various studies encompass the changing nature of the South African electricity transmission grid as well as the prospect of more renewables coming online.
As the Southern Hemisphere's largest aluminium smelter and the supplier of a significant percentage of primary aluminium for South Africa's value-adding secondary aluminium product producers, Hillside draws 1 140 MW virtually every minute of the day, every day of the week, every week of the year.
Close to a third of Hillside's aluminium, which is produced by 3 650 direct and indirect employees, is sent downstream to businesses that support a further 27 000-plus indirect employment opportunities.
Regarding collaboration with South Africa's State-owned power utility Eskom on the post-2031 energy arrangement, a number of different levers are available in an area that also has wind, sun and sea energy potential amid the 'greening' of South Africa's aluminium having considerable potential price benefit.
Hillside contributes nearly R10-billion to South Africa's GDP and a public–private effort could ensure that the aluminium produced benefits from the green price premium being paid for aluminium that is not carbon heavy.
Alcoa has entered into a definitive agreement to acquire South32 aluminium-linked asse
This asset adds scale to our smelting portfolio in a way that is expected to be cash flow accretive immediately, Alcoa Corporation President and CEO William (Bill) F Oplinger said of South Africa's Hillside Aluminium smelting business during a conference call following the NYSE-listed company's announcement of the aluminium-linked assets of the Johannesburg Stock Exchange-listed South32.
"We think we're acquiring fantastic long-term assets at a really reasonable price," Oplinger said during question time in reply to Citi Investment Research analyst Alex Hacking.
In addition to Hillside and the idled Bayside smelter property in South Africa's KwaZulu-Natal province, Alcoa will acquire South32's interests in the Boddington bauxite mine and the Worsley alumina refinery in Western Australia; and the Mineração Rio do Norte bauxite mine and the Alumar alumina refinery and aluminium smelter in Brazil.
In 2025, Hillside generated about $2-billion of revenue and $200-million of earnings before tax depreciation and amortisation, and in the current pricing environment is delivering strong cash generation, Oplinger added during the call covered by Mining Weekly.
"Hillside does introduce a new geography for Alcoa, but from a technical standpoint, it uses the same AP 30 smelting technology that we've operated for decades at two of our smelters," Oplinger pointed out.
Through Hillside, Alcoa is adding "meaningful volume and cash flow generation" and expanding its Africa footprint.
The smelter's production has been stable and predictable over the past five years, which the Pittsburgh-based Alcoa views as an important indicator of operational reliability and downside resilience.
In response to Hacking and also to Independent Research analyst John Tomaso regarding Hillside's electricity contract and its duration, Oplinger expressed strong positivity.
"The Hillside power contract runs through to 2031 so it's got a strong power contract today. We're confident that we'll be able to repower the Hillside smelter very effectively, and clearly, we'll start working on that towards the end of the decade."
In January, Mining Weekly reported that studies being undertaken on Hillside's future power source beyond 2031 have been taking place amid awareness of the different energy levers that can potentially be pulled.
The current power agreement is providing useful time to scrutinise power options during a period when various studies encompass the changing nature of the South African electricity transmission grid as well as the prospect of more renewables coming online.
As the Southern Hemisphere's largest aluminium smelter and the supplier of a significant percentage of primary aluminium for South Africa's value-adding secondary aluminium product producers, Hillside draws 1 140 MW virtually every minute of the day, every day of the week, every week of the year.
Close to a third of Hillside's aluminium, which is produced by 3 650 direct and indirect employees, is sent downstream to businesses that support a further 27 000-plus indirect employment opportunities.
Regarding collaboration with South Africa's State-owned power utility Eskom on the post-2031 energy arrangement, a number of different levers are available in an area that also has wind, sun and sea energy potential amid the 'greening' of South Africa's aluminium having considerable potential price benefit.
Hillside contributes nearly R10-billion to South Africa's GDP and a public–private effort could ensure that the aluminium produced benefits from the green price premium being paid for aluminium that is not carbon heavy.
Alcoa has entered into a definitive agreement to acquire South32 aluminium-linked asse