Gulf Extrusions (GE), the aluminium extrusions player in Dubai, has decided against going ahead with its expansion plans in Mesaieed, Qatar, according to a senior official. It will also take a decision on its Dh400 million joint venture with Abu Dhabi Basic Industries Corporation (Adbic) in Abu Dhabi after the market study being undertaken by Dun & Bradstreet. Additionally, the company plans to set up a life cycle assessment benchmark for the extrusions industry in the Middle East by the end of this year using its Dubai plant as an example.
"Our partner will continue alone in Qatar," Modar Al Mekdad, General Manager, Gulf Extrusions, told Emirates Business in an exclusive interview. "As for the Adbic venture, we will decide if we will go ahead or drop the idea after we complete the studies. But we have decided to focus on Abu Dhabi instead of Qatar for now. The market is picking up in this quarter."
In 2008, the company announced the Qatar venture would add 10,000 tonnes of extruded products to its annual production capacity. It was its first venture outside Dubai and was expected to start operations by mid-2009. In December 2009, Mekdad had told this newspaper that GE was till then undecided on Qatar and "should decide by the first quarter of 2010 if we should go ahead or not".
Part of the Al Ghurair Group of Companies, GE produces profiles ranging from architectural sections to components for household items, AC grills and customised products.
Have you scrapped the entire project in Qatar?
We have taken a decision to stop the venture in Qatar and focus on the Abu Dhabi project. Our partner in Qatar will now continue alone.
What about your 50:50 JV with Adbic to produce high-end architectural systems and automotive and engineering extrusions? As per the preliminary agreement, Adbic and Gulf Extrusions were to start construction of the plant in the third quarter of 2010 and start production in the first quarter of 2012.
We have awarded the market feasibility study to Dun & Bradstreet. After the completed studies, we will decide if we will go ahead and also take a decision on our product mix (see box 1) or drop the idea.
Have you seen any changes in the market?
We are witnessing a rise in orders in the second quarter of this year and can see that the market is recovering. It is getting back into the healthy area. Order bookings have improved by 15 to 20 per cent. Plus commodity prices have gone up and this will be another reason for developers to start examining their projects since they were expecting prices to go down. But prices are now going up since they are in line with international rates. Hence many developers will accelerate their projects, which in turn will generate good demand.
How far have you progressed on making the Dubai plant the benchmark for the Abu Dhabi venture?
We have already started the benchmarking exercises of our Dubai plant with Masdar and have assigned PE International Consultants for doing the life cycle assessment (LCA). By the year-end, we hope to set up an LCA for the extrusions industry in the Middle East and it will be a benchmark for the whole industry in terms of materials handling and automation, carbon footprint emission and quality. It will be the first of its kind study in the downstream industry.
What was the turnover in 2009?
In 2009, we were 11 per cent less than 2008. But it is due to a reduction in metal prices. In terms of production, we are slightly better than 2008. We are expecting 2010 to be better. In Q1 2010, prices went up from an average of $2080 per metric tonne and the metal is now traded at $2450 per metric tonne against $1500 per metric tonne for the same period in 2009.
What are your projections for 2010?
We are looking at a seven per cent increase over last year with current metal prices and hopefully in terms of profitability.
Joint venture under study
The extrusion plant in the Aluminum Park at Al Taweelah will help the company in its growth plans, Mekdad had told Emirates Business on December 13. "It is expected to produce 50,000 tonnes a year of aluminium extrusions and extrusion-based niche products. Feedstock for the plant in the form of aluminium billets and liquid aluminium metal will be sourced from the almost completed 718,000 tonne-a-year Emirates Aluminium smelter located nearby," he said.
The extrusions project is the second downstream scheme planned by Adbic in Abu Dhabi using Emal output following the launch of United Cables earlier this year. Emal is a 50:50 joint venture between Abu Dhabi's Mubadala Development Company and Dubai Aluminium or Dubal.
On a growth path
Gulf Extrusion was established in 1976 and is a member of the Al Ghurair group of companies. The first extrusion took place in 1979, with an initial capacity of 5,000 metric tonnes per year. Today, it operates six production lines with a capacity of up to 60,000 metric tonnes a year. The company products cater to industries such as architectural, automotive, marine, street furniture and heating, ventilation, air conditioning (HVAC) to name some. More than 60 to 70 per cent of the construction market in the UAE is supplied by Gulf Extrusions. It also has finishing facilities to colour the aluminium through powder method or the chemical method and supplies to players in the automotive sector such as Jaguar, Range Rover and Honda.
By Sona Nambiar
© Emirates Business 24/7 2010
