May 17 2011

UAE funds 48% of GCC aluminum

By By Staff Newly-established Emal faces marketing and supply challenges

The UAE controls nearly 48 per cent of the total aluminum investments of more than$22 billion in Gulf oil producers and the construction of a mega smelter in Abu Dhabi will allow the country to maintain its leadership in this sector.

Official data released on Monday showed capital pumped into the UAE's aluminum industry has totaled around $10.7 billion, covering two smelters in Dubai and Abu Dhabi. The sum accounts for nearly 48 per cent of the overall smelter investments of nearly $22.3 billion in the Gulf Cooperation Council (GCC), which groups the UAE and five other Gulf nations.

But the report by the Abu Dhabi Department of Economic Development highlighted some challenges facing EMAL smelter in Abu Dhabi, including marketing and a possible shortage of raw material.

The report showed 27 companies are involved in aluminum production in the GCC, including 13 in the UAE. Saudi Arabia, the largest Arab economy, has seven plants while Bahrain has five.

It said most of the manufacturing industries that produce finished aluminum products in the GCC countries are concentrated in projects that serve the building and construction sector, producing doors, windows and facades, as well as a number of factories for the production of household appliances, cans, drums and chips of aluminum.

A breakdown showed Qatar is the second largest aluminum investor in the GCC, with around $5.8 billion. It is followed by Bahrain with $3.2 billion and Oman with around $2.4 billion. Investments in Saudi Arabia stood at $300 million.

Production was put at 950,000 tonnes in Dubai, 720,000 tonnes in Abu Dhabi, 870,000 tonnes in Bahrain, 585,000 tonnes in Qatar, and 360,000 tonnes in Oman. A planned smelter in Saudi Arabia will produce 720,000 tonnes in 2012.

"Within the strategy of the Emirate of Abu Dhabi Industrial which aims at encouraging economic diversification, came the establishment of Emirates Aluminum EMAL in 2007, as a joint venture between Mubadala Development Company, and Dubai Aluminum Company Limited Dubal," said the report on the prospects of Abu Dhabi's aluminum industry.

" The project is being implemented in two phases; the first phase was completed at a cost of $ 5.7 billion, and included the building of 756 cell production cell along two production lines, a 2000 MW power plant, a factory for the production of positive electrodes and a multi-product foundry."

The project is located in Khalifa Port and Industrial Area at Al Taweelah. Its site near the port would facilitate in flow of raw materials, and provide gas for the power plant, thus ensuring long-term energy supplies.

The current production capacity of the project is 750,000 tonnes per year, including a variety of primary aluminum products, extrusion billets, and alloy standard aluminum alloy, and alloy sheets and high purity aluminum ingot. It is expected that the total production capacity of the project by the end of the second phase, would jump to 1.5 million tonnes of aluminum annually, making EMAL the largest single site for the production of aluminum in the world.

The project's products meet the needs of a number of industrial sectors such as aviation, automobiles and technology, in addition to the packaging and construction sectors, according to the report.

"The establishment of EMAL company formed a start towards turning the Emirate of Abu Dhabi and the UAE into a regional center in the aluminum industry, and confirmed that the UAE would lead the region in this important industry, and that the Emirate of Abu Dhabi would occupies a privileged global position in the industry in the coming years," the report said.

"The entry of Abu Dhabi in the aluminum industry is expected to provide major economic benefits in the long run, especially as it would form a strong basis for the establishment of promising local manufacturing industries, in the area, in fields of final products of aluminum."

But the report noted that EMAL could face challenge on penetrating world markets and competing with top investors in this kind of industry, especially with the increasing production of aluminum in the region and the entry of a number of new players this sector, which generates strong competition.

"It should be noted that the some aluminum products of the GCC countries are facing some of the tariff barriers, particularly in European markets, which impose tariffs by six per cent on imports of primary aluminum to protect their markets."

Another challenge is the need to promote and increase investment in manufacturing industries, to come out with products of higher value compared to produce primary aluminum, the report said.

Investment in manufacturing industries will support the marketing ability of " Emal through the creation of internal channels for the marketing of primary aluminum, which is used as an input to production in these industries.

"One of the important challenges is to increase awareness about the aluminum industry, and to establish institutions aimed at training and qualifying national cadres to work in the industry, so as to create a generation of national cadres capable of coping with advancement." the report said.

"Another key challenge is securing the needs of raw materials necessary for industry: In the light of the growing number of companies working on the manufacture of aluminum, and the surge of existing companies to increase their productivity, and the lack of reserves of bauxite in the Emirate of Abu Dhabi, then the ensuring of a stable supply of raw materials may be a significant challenge that must be taken into account in the long run."

© Emirates 24|7 2011

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