Community & environment

South32 was founded last May. Can you tell us about the project and the role of Mozal within the group?

On May 25th, 2015 BHP Billiton completed its demerger, which saw the creation of South32 as an independent company. South32 is a globally diversified metals and mining company with high-quality and well maintained operations mining and producing bauxite, alumina, aluminum, energy and metallurgical coal, manganese, nickel, silver, lead and zinc in Australia, South Africa, Brazil, Colombia and Mozambique with the Mozal smelter. The roots of South32 are in the Southern Hemisphere, with a head office in Perth, and regional hubs in Perth and Johannesburg, South Africa. South32 listed in May 2015 and our securities trade on the Australian Securities Exchange (ASX), Johannesburg Stock Exchange (JSE), London Stock Exchange (LSE) and the NY American Depositary Receipts Programme under the listing code of S32.

What implications does this demerger have for Mozal?

South32 operates using a regional operating model. Our businesses are run by people who understand their communities and the environment in which they operate. Our African businesses are managed from a regional hub in Johannesburg, with our Australian and South American businesses managed through Perth. There is a lot more attention being given by senior management and the CEO to developing strategies that are most suitable for the assets in operation in Africa. This integrated approach allows us to more closely align our businesses with the needs of our stakeholders and empowers us to optimize support functions regionally to deliver more efficient and productive operations. Following the demerger, Mozal became part of South32, and produces in excess of 560,000 tons of primary aluminum using Aluminum Pechiney AP35 technology to produce standard aluminum ingots. The smelter currently employs 1,200 direct employees and 700 contractors and has been a contributor to many more indirect jobs. Mozal has spent over $34 million on developing more than 200 projects for the benefit of the local community, working to provide a stronger governance framework and address various other challenges.

How would you assess your partnership with Midal, and what effects does this partnership have on the local economy?

Recently, Mozal signed an agreement under which it will supply 50,000 tons of aluminum to Midal, one of the world’s largest manufacturers of aluminum cables. Midal can be a long-term partner for Mozal. The benefit of partnering with Midal is that it will create additional opportunities for the service industry, as certain needs are unique to Midal’s operation. For example, they require reels, which they are currently importing, on which to put their cable. This represents an opportunity to produce locally, and this will have an accelerating effect in terms of creating jobs throughout the rest of the industry. There is also an opportunity to setup manufacturing facilities downstream from Midal’s operations to produce a variety of goods from the cable that Midal produces.

Which are your main export markets? And do you anticipate supplying more aluminum for the domestic market in the coming years?

We export mostly to Europe. Of our remaining output, about 50,000 tons per annum goes to Midal. There is of course the potential to supply more of our production to the domestic market, but speculating on these developments is difficult as they depend on various factors of business confidence and the specific markets of related industries. The activities downstream from Midal should be one key area of focus. Developing this aspect would stimulate production that can be utilized in the domestic market. Once this is sustainably implemented, there could be new sources of profitability.

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