Hulamin: Canned frustration for shareholders

Long-suffering shareholders in Hulamin will be hoping last week’s AGM finally signalled an inflection point for the aluminium products producer.

Certainly, the board of directors believe a turning point is imminent, even if the shareholders present reflected some serious reservations.

On paper, Hulamin should be a compelling business capable of maintaining dominant market share, sustainable profit delivery and even a dividend stream. The growth in the local can-body market, for large customers such as packaging group Nampak, offers a particularly sweet spot for the group.

But it’s not the imposing industrial beast it should be … and doubts linger that the iconic business — once an Anglo American associate — will ever deliver on its promise unless there is urgent strategic intervention.

Board chair Paul Baloyi, though, remains confident. “The major problem with Hulamin is getting its products to the market. We have good margins and a good mix. We do not have a demand problem. In terms of our market analysis, demand outstrips supply …”

That said, Hulamin looks every bit the embodiment of the gradual fizzling out of large industry in South Africa — its decline, in terms of smashed shareholder value, rivalled only by local steelmaker ArcelorMittal.

When Hulamin (spun out of Tongaat-Hulett) listed in 2007, there was a brief spurt of market optimism, with the share touching R42. That gave the business a market value of R13bn. Almost two decades later, Hulamin is trading below 180c with a market value of just R574m — about a quarter of what the group reflected as the carrying value of its property, plant and equipment in the year to end-December.

The past six years of earnings have been frustrating — from a loss of 94c a share in financial 2020 to encouraging earnings of 105c a share in 2022, and then a dribble-down to 45c a share in 2024. More recent was the -21c a share loss in the past financial year after hitches in new production capabilities snagged the promised profit flows that should have followed a major capital expenditure exercise.

Four years ago, Hulamin initiated a strategic reset when it made a R500m capital investment to enhance its can-body capacity and capability. This was aimed at capitalising on the growing demand for locally produced cans.

The capacity hitches have not been entirely ironed out yet. But Baloyi is adamant that if the plant starts working to specification, the company will turn profitable. “In my mind, if we can do that, there should be no reason why we should not start looking at rewarding shareholders for this investment. It’s our intention to restore the group to profitability soon.”

While Baloyi would not commit to a specific timeline, he did not expect it would take years to fix. Some shareholders, who have bemoaned slow execution at Hulamin, might take that with a pinch of salt.

Large Hulamin shareholder Volker Schütte, who has extensive experience in the metals industry, again offered extensive critical comment at the AGM — even refusing to be cowed by Baloyi into abridging his prepared statement.

An important aside: Schütte has been true to his word in terms of gaining influence at Hulamin. In July 2024 he told the FM: “I have about 7%. If they don’t talk to me, I will increase my stake. If they still don’t talk to me, I’ll increase it again. If there are enough shares to buy and I don’t run out of money, I’ll keep doing this until they listen to me.”

Schütte now has 8.35% of Hulamin, and most shareholders might hope his points don’t fall on deaf ears again. He highlighted that Hulamin is the only aluminium rolling mill in Africa south of Egypt. “Our mill has a monopoly position for rolled products in South Africa, a market worth well over 100,000t a year, which is protected with a 15% duty on all imports. In addition, it has duty-free access to the European market, which is huge and which imports rolled products of more than 1Mt a year.”

If there are enough shares to buy and I don’t run out of money, I’ll keep doing this until they listen to me

—  Volker Schütte

Schütte stressed that Hulamin’s product was of high quality and had, until now, a very good technical reputation around the world. What’s more, he said, the group had an aluminium smelter, South32, down the road, enabling it to directly receive liquid virgin aluminium into its cast house — “which is of great financial benefit”.

Schütte also highlighted Hulamin’s access to a big local market of post-consumer scrap at very favourable prices. “The export of scrap is strictly regulated by our government — to the benefit of Hulamin, again.”

He was brutal in his assessment of Hulamin’s financial position, noting that as of end-2025 a total of about R9bn in plant and equipment had been installed since 2007. After depreciation, the value stands at R1.1bn. Then there’s the huge property it owns in Pietermaritzburg, which was valued at more than R500m in 2007 and is now worth more than R1.2bn after further investments.

Despite the huge levels of investment, Schütte estimated that Hulamin had made a consolidated loss of about R150m. Even worse, the group had done nothing to grow the local downstream aluminium industry — selling the same tonnage into the local market today as it did 10 or 15 years ago.

“Taking all these basic facts and numbers into account, we must then see where our company is standing today. The share is trading for around 5% of its listing price and well below 40% of its recent high in July 2024. The market capitalisation today is R580m. I would safely say this R580m is far less than the scrap value of all machinery and the huge property in Pietermaritzburg.”

Schütte said he “was more concerned than ever” about management inertia and about future prospects. “The executive and the board of Hulamin are aware of many issues that need to be addressed, but the implementation of any decision — if a decision is even made — is extremely slow. The board is going slowly nowhere."

It is not only Schütte who is concerned. At the AGM Raoul Gamsu, the former CEO of Consolidated Infrastructure Group, queried progress on the stated goal of finding a strategic partner.

The shareholder of reference at Hulamin is the Industrial Development Corporation, which holds a 29.15% stake. Other significant shareholders include deep-value doyen and Ninety One portfolio manager John Biccard (5.11%) and Ninety One (4.22%).

Baloyi said a strategic partner was still being contemplated from two perspectives. First, the board recognised that Hulamin was behind the curve from an expertise and technology perspective. Second, the board realised that the funding required to build Hulamin into a “state of the art global player” is significant.

“It does not make sense to fund it from a local base. We’ve been engaging … Some discussions have been happening, but we are not at a point where we can share these details with you."

Gamsu was also keen to understand, in terms of debt funding, just how much headroom was available to Hulamin. At the end of 2025, Hulamin had noncurrent debt of just over R1.6bn and a bank overdraft of about R86m. The group forked out R196m in interest in 2025.

Baloyi said funding capacity was a key area. “We have gone through a thorough review of the company … its access to funding and its initiatives. I’m very happy to say as a board we are confident that the funding position is pretty good and we’ve got enough headroom currently and planned into the future for us to continue being in business.”

He said initiatives were under way to expand Hulamin’s trading base, building on the recent production plant upgrade to boost capacity. “By extension, that would mean we have to look at funding increased working capital. But we will announce these plans as we go into the future.”

Gamsu wanted details: “How much is that headroom exactly? What’s the quantum?” With the aluminium price up dramatically over a year, the question is pertinent.

Baloyi, however, responded that it’s a constantly moving target. “Suffice to say, it is enough at this point for us to be comfortable.”