Blog entry by Olaoluwa Afolabi
I think I am poor at summaries. Hence, I tend to have a large essay. That brings me back to Alusaf Hillside Project, a case study I had for Analysis of Business Problem examination. In light of doing better with summaries, I like to make this blog about the summary of the Alusaf Hillside Project case study.
With prices at all-time lows toward the start of 1994, South Africa's sole primary Aluminium maker - Alusaf - is thinking about building the world's biggest greenfield smelter, with a capacity of 466,000TPY at Richard's Bay. Rob Barbour, the Managing Director of Alusaf, was confronted with whether to continue with the plans.
In 1994, Alusaf was the only Aluminium maker with a 170,000TPY in South Africa. In 1993, Alusaf's revenues were $220.2m, which was an increase of 1% from 1992 figures. Alusaf recorded a profit of $8.4m in 1993.
The prices of Aluminum towards the start of 1994 were at a record-breaking low of about $1,110. In 1991, global costs remained at $1,300. Several global factors contributed to this uncertainty such as the Soviet military machine in the 1990s, excessive production by the Commonwealth of Independent States, as well as a general glut in the global Aluminium market.
South Africa as a nation produces 200,000TPY of which Alusaf delivered 170,000TPY from it; the remaining 30,000TPY is made by the secondary producers. South Africa exports totalled approximately 100,000TPY, of which 20,000TPY were semi-fabricated products and 80,000TPY were ingots.Escom, South Africa's power utility tried to uphold the new facility plans by offering 680MW of electricity to Alusaf they keep the Bayside and the new facility plan. The 680MW of electricity they offered was influenced by the push back Alusaf gave to Escom based on smelting viability and potential shutdown.
I actually do hope it is a good summary and I like to thank you for reading.