Tawanda Karombo

South32 said on Tuesday that it will defend its South African subsidiary, Hillside Alluminium, against a claim made by an Australian company that it improperly used intellectual property from an engineering and transport contractor to develop its own systems.

Strang International, an Australian engineering contractor, has dragged South32 to the Federal Court of Australia, complaining that the diversified resources group and its South African subsidiary, Hillside Aluminium, stole intellectual property.

According to Strang International, which was contracted to the international resource group, the documents and information were then unprocedurally used by South32 to develop a metal transportation system for Hillside Aluminium operations in South Africa.

South32 on Tueday confirmed to Business Report that it will defend itself and its South African subsidiary against the claims.

“South32 confirms that Strang International Pty Ltd (and one other Strang entity) have commenced legal proceedings in the Federal Court of Australia against South32 Ltd and South32 subsidiary entity Hillside Aluminium Pty Ltd in the form of an interlocutory application. The South32 entities are defending the matter,” the company said in an emailed response to questions.

The legal dispute between the two companies is centered on trade secrets under Strang International that it now argues were utilised by South32 to develop its own transportation mode. It further states that Hillside Aluminium accessed the trade secrets during works on its smelter.

“South32 and Hillside Aluminium failed to disclose that they had replicated or built or procured a third party to replicate or build systems or apparatuses incorporating Strang Group confidential information in a design to exclude the Strang Group,” Strang states in its court claim.

Hillside Aluminium, operated by South32 at Richards Bay in South Africa, saw capital expenditures for the half year decrease by $6 million to $19m. The company’s projected capex for Hillside over the full year at $55m will go into “fleet replacements and progress work to replace the smelter’s pot tending” assemblies.

“Capital expenditure is expected to be elevated over FY25 and FY26 as we continue work to replace the pot tending assemblies,” said the company recently.

Hillside Aluminum’s costs at $2 135 per ton are expected to to rise to $2 351 per ton over the full year.

During the half year, the operation had higher higher sales volumes of 362 000 tons, with lower raw material input prices for coke and pitch offset by higher alumina and energy prices, and a stronger South African rand.

Over the full year, South32 expects Hillside Aluminum costs to be influenced by the price of raw material inputs, the rand and inflation-linked indexation energy costs.

South32 has been reducing capital expenditure for its South African aluminium operations but expects to ramp up over the next year while it has received the Competition Commission approvals to divest the Metalloys local manganese alloy smelter.

Its South African aluminium operations at Hillside raised saleable production by 1% to 362 000 tons in the half-year period to December “as the smelter continued to test its maximum technical capacity, despite the impact of load-shedding”.

Aluminium sales from Hillside firmed up by 10% in the December 2024 quarter as inventories at the mine returned to normal levels.

South32’s South African manganese operations consists of two manganese mines in the Kalahari basin, and the Metalloys manganese alloy smelter that was placed on care and maintenance in 2020 is now being disposed of.

BUSINESS REPORT

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South32 defends Hillside Aluminium amid alleged intellectual property theft in Australia