Smart processes and smart people who are committed to continuous improvement have seen New Zealand Aluminium Smelters Ltd (NZAS) transform itself over the past 10 years into the world’s preferred supplier of premium aluminium, achieving $1.4 billion in export revenue in 2005.
Stewart Hamilton, Manager Business Improvement, believes that makes NZAS the largest single site exporter in New Zealand, and with 780 staff at its Bluff smelter, a major employer.
NZAS was set up in the 1960s by Australian firm Comalco who selected the site for its access to Lake Manapouri as a source of hydro power, Bluff deepwater port and the city of Invercargill which provides a good talent pool for its workforce. Aluminium is made from bauxite, which Comalco mines in Australia, processes into alumina and then ships to Bluff for further processing at the NZAS smelter. Mr Hamilton says bauxite fetches about US$20 a tonne on the international market and aluminium $2500. By further processing into premium aluminium, NZAS achieves up to US$500 on top of that.
Today NZAS is owned by Comalco (majority shareholder), which in turn is 100 per cent owned by Rio Tinto, the second biggest mining company in the world, and the Japanese company Sumitomo Chemical Company. Sumitomo ships 20 per cent of NZAS’ annual production to Japan for its own use, the balance is sold and marketed throughout the world by NZAS with the assistance of Comalco agents.
NZAS achieved record production in 2005, producing 351,449 tonnes of aluminium, 90 per cent for export markets. A major and ongoing challenge for the business is the power price and power availability. Being the biggest single user of the nation’s power Mr Hamilton says NZAS is very conscious of the need to demonstrate the value it adds for the country and in 2001 and 2003 when lake levels were low, as a sign of good faith, it reduced its production by up to 10 per cent.
Traditionally, NZAS produced standard aluminium, a commodity product which can be made by just about anybody, says Mr Hamilton. Strong and lighter than steel, it is used in a wide variety of applications, from vehicles and planes to window frames and aluminium foil. But over the past decade as power prices and costs increased in New Zealand, Mr Hamilton says NZAS found it couldn’t compete in the standard aluminium market with smelters in countries like China and the Middle East which have access to cheap power and labour.
In order to survive, it has successfully changed its strategy to produce high purity aluminium, increasing its value added product export markets.
“We’ve aimed to maximise product value as a benefit to our owners through increased revenue and to our customers through improved quality and functionality, adapting our product mix to meet changing market conditions and customer requirements,” explains Mr Hamilton.
Target markets are Asia, Europe and the USA, selling to clients that require the extra purity in the metal for their products, such as high value electronics and, increasingly, the aerospace industry (NZAS has provided the aluminium in the wings of the new Airbus A380).
“Japan has been our primary target export market because of the strong demand for high purity aluminium, which has improved reflectance and conductivity property and is required for capacitors and memory discs. Our customers are people who make high end electronic components for companies like Sony and Hewlett Packard.”
While it produces just one per cent of the world’s aluminium, NZAS has become the largest supplier of high purity aluminium. “Today 60 per cent of the world’s memory discs in computers and 40 per cent of the world’s capacitors (the small components inside cellphones that hold the electrical charge) are made from purity aluminium from our smelter,” says Mr Hamilton.
A key competitive advantage is that high purity aluminium can normally only be produced through secondary processing, at significant cost to customers, but NZAS has developed technology which enables customers to buy primary aluminium metal for direct application, saving them time and money.
Mr Hamilton says only one other supplier in the world can achieve the same purity without secondary processing, but NZAS has been winning market share off them because it tailors products to the customer and provides superior customer service and reliability of supply.
“It doesn’t matter what export business you are in, you need to find a market that enables you to distinguish yourself and really create a brand for your product. We’ve created a really strong brand for NZAS in the market, and then developed strong relationships with customers and continuously improved our products to help our customers achieve or exceed their expectations.”
Staff are highly valued at NZAS and Mr Hamilton says ensuring their safety is a priority.
“It’s the people at NZAS that are behind our growing success. Our staff pride themselves on their passion, tenacity for results and professionalism. Many have been employed here for over 25 years and have an excellent understanding of how to get the best out of the process to deliver customer value.”
Image: New Zealand Aluminium Smelters staff at work.
Contact:Stewart HamiltonManager Business ImprovementNZASPhone: +64 3 218 5571Email: stewart.hamilton@riotinto.comWebsite: www.comalco.com and www.purekiwimettle.co.nz
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