The Gulf Aluminum Council (GAC) indicated that the overall production capacity of aluminum smelters in the Gulf Cooperation Council (GCC) could come close to 5 million tons a year by 2013 after the construction of Saudi Arabia’s Ma’aden Smelter.
Quoting a report conducted by Qatar Aluminum Company, GAC said that the production capacity is divided among Aluminium Bahrain (ALBA) with 880,000 tons, Dubai Aluminum with 1,002 million tons, Sohar Aluminum with 370,000 tons, Qatar Aluminum with 600,000 tons, Emirates Aluminum with 750,000 tons, and Saudi Arabian Mining Company (Ma’aden) with 740,000 tons.
The UAE, Oman, Bahrain, and Qatar are all home to some of the largest smelters in the world, Deloitte said in its report "GCC: Tomorrow’s Aluminum Powerhouse".
Five smelters exist in the GCC today with a combined production capacity of just under 3.6 million tons. Their cumulative contribution to total global production in 2010 is estimated at 7 percent. Considering the fact that Ma’aden, a sixth smelter in Saudi Arabia, is set to become operational by 2013 while Emal’s robust expansion is scheduled for completion by 2014, the GCC is poised to become a primary aluminum production powerhouse with the expectation that the region will contribute to over 13 percent of the world’s aluminum production by 2013.
The region’s aluminum industry as a whole is conducive to investment given the availability and affordability of power and labor. In times when increasing costs is becoming critical for more and more primary producers around the globe, the Gulf presents a viable and attractive venue for investment in aluminum production across the entire industry’s value chain. Furthermore, the GCC smelters are evaluating and studying future expansion plans to increase their global production contribution to a cumulative capacity estimated at 7 million tons per annum by 2020.
One of the key appeal points of aluminum as a metal over others lies in its ability to be completely recycled. Aluminum recycling, a sub activity of secondary aluminum production, while considered well developed in American and European markets, is still underdeveloped in the GCC.
The global average of recycled aluminum as a percentage of total production (both primary and secondary) was estimated at 32 percent in 2010, whereas that figure is estimated at a mere 2 percent (or 65,000 tons) in the GCC. This highlights a significant opportunity to develop the aluminum recycling activity in the region.
The cost advantages for industrial activity in the region coupled with increasing support and encouragement for investment in downstream aluminum operations creates an attractive opportunity for investment.
A contributing factor to the GCC’s under-developed aluminum recycling segment can be attributed to the lack of sufficient scrap availability in the region. A lack of laws hindering the exportation of scrap aluminum from GCC countries is prompting the majority of scraps to be exported to other markets leaving current aluminum recycling players in the region under-utilized. The presence of foreign buyers in the market is contributing to high scrap metal prices which are hindering the potential growth of the secondary recycling market in the GCC.
Against this backdrop, Arab International Aluminium conference (ARABAL) will be held in Doha Nov. 20-22, sponsored by Maaden, ALBA, Sohar Aluminum, and a number of regional and international aluminum companies, including Kuwait Industries Holding Company. This collective sponsorship is testimony to the importance of the event, which is the most important in aluminum industries in the Middle East and the only conference attended by all GCC aluminum industrialists.
The agenda includes discussion of the latest in aluminum industries, related technology, environmental impact, security and safety aspects, in addition to some market supply-demand issues and recycling matters.
SG/QJM
4 August
