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November 29, 2023

Furnace heat-up is major milestone for Ardagh Glass Packaging-Africa’s Nigel expansion project despite tough economic conditions

Ardagh Glass Packaging-Africa (AGP-Africa) announced the heat-up of the N3 furnace at its Nigel production facility in Gauteng, South Africa this week. The delivery of another R1.5 billion mega-project, within budget and on time in just over 12 months from approval, is a great achievement by all involved. The Nigel 3 (N3) expansion was announced shortly after the commissioning of the N2 expansion project at the same facility. It comprises a new furnace and four production lines. The expansion will add 50 percent more output to the facility’s production, making Nigel the largest glass container production facility in Africa and one of the largest and most efficient facilities globally.

Despite declining economic conditions in 2023, this investment by Ardagh Group lives up to the acquisition commitments made to government as well as the promise to customers to continue investing in additional capacity ahead of demand growth to ensure sustainable, long-term supply to the industry. Unfortunately, over the past 12 months during the N3 build, there has been a further decline in demand for glass packaging, mostly due to changes in packaging formats in the beer industry and a large decline in the wine industry in the Western Cape. In line with its commitment to fiscal discipline, the company has responded timeously by mothballing older furnaces in Gauteng and the Western Cape in particular, where stocks of wine had reached excessive levels.

“While demand has been disappointing, it is normal for our industry to go through cycles where capacity exceeds installed demand and our facilities need to operate below name-plate capacity for periods of time,” said Paul Curnow, Chief Executive Officer of AGP-Africa. “However, our commitment to long-term growth in South Africa remains unchanged. The recent investments in capacity leave us well positioned, with a modern asset base and reasonable spare capacity to be restarted at short notice when sustainable demand supports additional production.”

The two expansion projects have created over 300 direct jobs in the Nigel area and significant ancillary supply-chain expenditure in local communities. “We also estimate that at least five indirect jobs are created for every direct job, indicating a much larger impact in job creation, which is much needed in the extensive Ekurhuleni Metropolitan Municipality,” states Curnow.

Further, the N2 and N3 projects incorporate significant energy, water efficiency and environmental benefits. These represent important steps in AGP-Africa’s journey to decarbonise glass production, reduce emissions in the communities in which the company operates and provide customers with packaging that supports localised closed-loop recycling. Beyond the investment in additional glass capacity, more than R150 million is being invested in air emissions treatment systems at Nigel to ensure no production impact on air quality. The Nigel facility will also house the company’s single largest renewable project to date – a 10MW solar PV array.

“This project, along with others in solar, wind and hydro power, will deliver on our commitment to using 100% renewable energy by 2030,” adds Curnow. The facility will also benefit significantly from the company’s earlier investments of several hundred million rand in glass recycling plants to provide high-quality, recycled inputs to displace virgin materials. This has already allowed Nigel to run production with up to 80% recycled content and is enabling the company to meet its commitment to government to achieve recycling rates of over 60% in the short term.

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