South32 CEO, Graham Kerr, provided an update on its aluminium business during a recent conference call.

Speaking at the Global Metals, Mining and Steel Conference last month, he said demand for aluminium continues to increase.

“Aluminium has always been an attractive story around demand, demand has never been an issue and that demand continues to increase for us."

The company is a believer in China’s 45 million tonnes per year cap, which had helped prevent oversupply.

“We’re a firm believer that that cap of 45 million tonnes is real and we don’t see the government deviating from that.

“We’re asked if price will make a difference and we say no. They want to use energy in a considered way and exporting energy is not the intent of what the government is trying to do.

“That cap will keep tension and we will see new developments in places like Indonesia. In the last couple of decades 80% of new smelting capacity has come out of China, but now it will switch to ex China.”

He believes higher aluminium prices as a result of the situation in the Middle East could potentially last for another 18 to 24 months, which will generate strong cash for the company.

“One downside for us is we would love to continue to see Mozal running because it is a strong cash flow generator in this environment.”

Its Hillside smelter in South Africa recently celebrated its 30-year anniversary in an event attended by the South African president Cyril Ramaphosa as well as two cabinet members.

There was strong support from the government about the continued operation of the smelter.

“A key component of that is affordable, lower carbon power,” said Mr Kerr.

“Hillside can run for another 30-40 years, it is running at its technical limit, it has some of our best people in the business, and it makes a big difference to the local economy, so it’s well supported by people there.

“The key is can we get a new power contract there.

“The contract expires in 2031 and we’ve working with (local power supplier) Eskom on this for about five years and it feels like it is heading in the right direction, putting pen to paper is the next opportunity,” he said.

A webcast and presentation of Mr Kerr's speech is available via the South32 website.