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Introduction of AFSA
The aluminium lifecycle and industry
- Primary Aluminium
- Secondary Aluminium
Feedback on NFTN interventions
Survey of foundries supplying the automotive industry
The importance of aluminium in transport
Update on the opportunities in the automotive sector – LOCALISATION INDABA 28-29 July 2015
Concluding remarks
2
THE INDUSTRY ASSOCIATION OF THE
SOUTH AFRICAN ALUMINIUM INDUSTRY
• Purpose of AFSA
– Promote the use of Aluminium
– Promote the South African Aluminium Industry
– Promote and represent the interests of its members
• Members include
– Smelters
– Secondary Smelters
– Semi Fabricators
– Fabricators
– Foundries
– Distributors
– Suppliers
3
Scrap Collection
Secondary
Smelting
Manufacturing
Industry
Power
Generation
Bauxite
Extraction
Alumina
Refining
Primary
Smelting
Processing
(Rolling, extrusions, etc.)
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5
The South African Aluminium Industry encompasses the Complete Value Chain
Market
Recovered Aluminium
SECONDARY
SEMI-FABRICATION
FABRICATION
USE
SCRAP
PRIMARY
Cable Extruded Product
Rolled Product
Castings Other
Chemical Other
General Military Auto-
motive Transport Mining
Consumer Durables
Packaging Building & Construc-
tion Electrical
Secondary Smelters
Hillside Smelter
Casthouse Imported
Raw Materials
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SMELTER PRIMARY ALUMINIUM (1)
SECONDARY SMELTERS ALUMINIUM ALLOYS (6)
CAST HOUSE (1)
ALLOYS
ALUMINIUM FOUNDRIES (77)
SCRAP
PRIMARY (4) Based
SECONDARY (73) Based
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Sand Casters – Secondary Gravity Die Casters - Secondary High Pressure Die Casters - Secondary Low Pressure Die Casters - Primary 26
8
2008 2013
TONS TONS % CHANGE
Aluminium Casting Production
35 000 22 000 -37%
Wheel Production - Primary Aluminium based
25 000 17 000 -32%
Component Castings -Secondary aluminium based
10 000 5 000 -50%
Total Aluminium Castings:
22 000 tons
Total Automotive : 20 000 tons (91%)
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Secondary Aluminium Castings:
5 000 tons
Secondary Smelters Closed
10
Foundries Direct Jobs Indirects
2000-2010 33 842 2998
2011-2015 5 120 estimated 450 estimated
Total to date
38
962
3448
Secondary Smelters
To date 2
11
AFSA was closely involved in conceptionalising the NFTN
Numerous Technical Benchmarks on Foundries were completed
Energy Audit
• One foundry reported an energy cost reduction of 21%
• Another launched a major energy saving program that reduced energy intensity from 900 kwh/T to 675 kwh/T - A 25% REDUCTION
12
Providing continuous technical support to Foundries to reduce scrap rates and enhance productivity
Aluminium die casting specialist visit(s)
• Recommendations turned companies around
• Die design expertise resulted in:
– reduced specific energy
– quality improvement
– reduced scrap
– improved competitiveness
Training initiative
• Production manager delighted with effectiveness of shopfloor training:
– Boosted knowledge and morale on the shopfloor
– Mangement gained new insights
13
Metal Solidification Simulation
• One foundry will not implement a new die without simulating the solidification
• Results in:
– Improved quality
– Less porosity
– Less scrap
– Improved competitiveness
14
High level assessment of foundries in the automotive supply chainwas undertaken – NFTN/AFSA
2012
2013
15
Tier 2 and 3 suppliers
Smaller, jobbing foundries
Automotive component orders increasing
Often new to the Automotive Industry
Conclusion
Tier 2 and 3 foundries will continue to benefit from NFTN type Continuous Improvement Initiative (CII)
16
Tier 1 Production Foundries
Products
Qualified to OEM Standards
17
ISO 18000
TS 16949/ Q S 9001
Cylinder Heads, Engine Blocks, Cam Covers, Wheels
Customers
Procurement
Global strategic sourcing
Purchasing decisions often not taken in South Africa
18
AUDI, BMW, FORD, GM, MERCEDES BENZ, NISSAN, TOYOTA, VW
CONCLUSION
Tier 1 foundries in the Automotive supply chain are qualified to international automotive standards
Significant investments have been made in state-of-the-art equipment
Foundries have benefited from interventions
However
Volumes too low to be competitive and are shrinking
No new model range orders
19
THE AUTOMOTIVE FOUNDRY SECTOR IS AT RISK
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Customer Perspectives
Findings
Support the APDP and Vision 2020
Surprised by extent and diversity of the local Foundry Industry
Would prefer a local casting supply chain which is:
– Competitive and secure
– With an international partner (preference for international tier 1 supplier)
24
However
Local foundries are not competitive
Reject rates too high
Future castings will be more complex (falling behind)
OEM’s want to see investment by foundries and engagement with an international partner
25
OVERALL CONCLUSION
Many foundries in the supply chain have benefitted from NFTN inititiatives
• Smaller foundries see increased volumes
• Production foundries are qualified to international automotive standards
• No new model orders
• Volumes too small to be competitive
• Significant opportunities exist
• Customers believe foundries are not competitive and want to see investment and overseas technology partners
Will require a significant intervention
26
Legislation requires reduced GHG emissions in the transport sector
Reducing the weight of vehicles achieves this
• Aluminium has a variety of properties that make it very effective in the design of passenger vehicles
– It is 1/3 the weight of steel
27
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VISION 2020
Volume Local
(units) Content
%
2013 2020 2013 2020
29
600 000
1.2 mil
Local 30%
Local 60-65%
“Global Automotive Industry represents a major development for South African based component manufacturers.”
But intense international competition exists
Key Question 1
Will South Africa be a manufacturer or an assembler?
As a manufacturer
Deep localisation of component manufacture
As and assember
More limited localisation
26
Localisation increased in 2013 to 2014
8 Sectors increased
-Trim
- Metal Pressing
- Electronics
- Plastic Mouldings
However
3 Sectors, including the foundry and forge sectors, declined
31
Key Question 2
Can South Africa become a manufacturer of vehicles if it fails to (re)build its foundries and forges?
OUR VIEW
Castings are essential to any manufacturing sector
The challenge is to maintain and grow the remaining foundries
Scrap at a preferential price would immediately make the industry more competitive
32
Cost of producing aluminium die castings
Raw material makes up 40% of the cost of an aluminium casting
The raw material is secondary aluminium which is based on aluminium scrap
Scrap is a key cost driver in producing castings
33
Many NFTN interventions have been successful and very valuable to the foundry industry
Interventions have assisted foundries to become more competitive, and ensured the survival of some foundries
Foundries have upgraded equipment and skills, and are more competitive with relatively low cost interventions and investment
Improved skills, processes, local and international know-how and technology lay the foundation for future expansion
The challenge is to maintain and develop the remaining foundries as new opportunities develop
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AFSA
Tel: +27(11) 455 5553 Fax: +27(11) 455 5554
E-mail: [email protected]
Helvetia House, Greenvale Road, Wilbart, Germiston