EGA grows adjusted EBITDA by 63 per cent to AED4.1 billion ($1.13 billion) in most challenging year in decades for global aluminium industry

Abdulnasser Bin Kalban, Chief Executive Officer: “EGA delivered a significantly improved financial performance in 2020 in the most challenging year for the global aluminium industry in decades. We achieved this through product flexibility, a relentless focus on controllable costs and cash generation, and strong ramp-up performance in our new upstream projects despite the additional challenges of COVID-19.

“The recovery of the global aluminium market that began in the second half of 2020 has continued into 2021, based on the brightening world economic outlook and growing optimism about the rollout of COVID-19 vaccination. We expect benchmark aluminium prices to remain around $2,000 for 2021 as a whole.

“At EGA we continue to be focused on further improving the global competitiveness of our business as a national industrial champion for the UAE.”

Financial highlights of 2020

• Adjusted EBITDA of AED 4.1 billion ($1.13 billion), an increase of 63 per cent compared to AED 2.5 billion ($693 million) in 2019, driven by the strong ramp up of EGA’s alumina refinery and bauxite mine, focus on controllable costs, and lower global prices for input materials.
• Cash generated from operating activities improved by 35 per cent to AED 5.5 billion ($1.5 billion), compared to AED 4.1 billion ($1.1 billion) in 2019.
• Operating working capital optimised to release in excess of AED 1.4 billion ($370 million) of cash.
• Smelting EBITDA margin of 23 per cent, ranking amongst the best globally for similar businesses, compared to 14 per cent in 2019.
• Revenue of AED 18.7 billion ($5.1 billion), a reduction of 9 per cent from AED 20.5 billion ($5.6 billion) in 2019, driven by lower world prices for aluminium and reduced demand for value-added products.

Operational highlights of 2020

• No injuries leading to time off work at any EGA operation. EGA’s Total Recordable Injury Frequency Rate, a broader measure of safety performance, continues to be significantly better than industry benchmarks.
• Sales of 2.52 million tonnes of cast metal (2019: 2.60 million tonnes). EGA remains the third largest producer of primary aluminium in the world outside China.
• Product mix flexed through 2020 in response to market demand. However despite COVID-19, value-added products or ‘premium aluminium’ accounted for 72 per cent of total sales (2019: 87.4 per cent), supplied to more than 400 customers in over 50 countries. EGA continued to be the world’s largest ‘premium aluminium’ producer by volume.
• Sales to local UAE customers of 252 thousand tonnes (2019: 294 thousand tonnes), representing 10 per cent of total sales, supplying the important downstream aluminium industry in the UAE.
• Al Taweelah alumina refinery produced 1.92 million tonnes of alumina, reaching close to its annual nameplate capacity of 2 million tonnes. Production was at or above nameplate capacity in each month of the fourth quarter.
• Guinea Alumina Corporation exported 9.56 million tonnes of bauxite ore, making EGA the second largest third-party seller of bauxite in the world in its first full production year.

United Arab Emirates, 16 March 2021: Emirates Global Aluminium, the largest industrial company in the United Arab Emirates outside oil and gas and the world’s largest ‘premium aluminium’ producer, today reported adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (adjusted EBITDA) of AED 4.1 billion ($1.13 billion) for 2020, a 63 per cent increase over 2019.

EGA’s smelting EBITDA margin for 2020 was 23 per cent (2019: 14 per cent), ranking amongst the best globally.

EGA flexed its aluminium product mix during 2020 in response to fluctuating market demand caused by the impact of the COVID-19 pandemic on world manufacturing.

However for the year as a whole EGA maintained its position as the world’s largest ‘premium aluminium’ producer by volume, with sales of value-added products of 1.8 million tonnes or 72 per cent of total sales. EGA sold value-added products in 2020 to more than 400 customers in over 50 countries.

Value-added products attract higher premiums over benchmark prices than those achieved by standard aluminium and enable EGA to maximise the value of its primary aluminium production.

EGA sold 2.52 million tonnes of cast metal in total in 2020 compared to 2.60 million tonnes in 2019. The decrease was in part due to product mix, as alloying materials are not added in the P1020 casting process.

Local sales to the downstream aluminium sector that has grown around EGA into one of the UAE’s most significant industries, were 252 thousand tonnes compared to 294 thousand tonnes in 2019.

Cash generated from operating activities was up 35 per cent to AED 5.5 billion ($1.5 billion), compared to AED 4.1 billion ($1.1 billion) in 2019. EGA continued to improve working capital, which was reduced by more than AED 1.4 billion ($370 million) in 2020 to generate additional cash, and also focused on further improving operational efficiency.

Abdulnasser Bin Kalban, Chief Executive Officer of EGA, said: “EGA delivered a significantly improved financial performance in 2020 in the most challenging year for the global aluminium industry in decades. We achieved this through product flexibility, a relentless focus on controllable costs and cash generation, and strong ramp-up performance in our new upstream projects despite the additional challenges of COVID-19.

“The recovery of the global aluminium market that began in the second half of 2020 has continued into 2021, based on the brightening world economic outlook and growing optimism about the rollout of COVID-19 vaccination. We expect benchmark aluminium prices to remain around $2,000 for 2021 as a whole.

“At EGA we continue to be focused on further improving the global competitiveness of our business as a national industrial champion for the UAE.”

Lower benchmark aluminium prices and premiums led to a reduction in revenue to AED 18.7 billion ($5.1 billion), compared to AED 20.5 billion ($5.6 billion) in 2019, partially offset by ramp up of bauxite sales from EGA’s bauxite mining subsidiary Guinea Alumina Corporation.

GAC exported 9.56 million tonnes of bauxite ore, making EGA the second largest third-party seller of bauxite in the world in its first full production year.

EGA’s Al Taweelah alumina refinery produced 1.92 million tonnes of smelter grade alumina, close to its annual nameplate capacity of 2 million tonnes in its first full year of production. Al Taweelah alumina refinery’s production was at or above nameplate capacity in each month of the fourth quarter of 2020. Al Taweelah alumina refinery supplies EGA’s own aluminium smelters.

As part of its debottlenecking of production and investment in high return growth projects, EGA is expanding the existing potlines at its Al Taweelah aluminium smelter by 66 reduction cells to increase production capacity by 78,000 tonnes of hot metal per year.

The expansion project is currently 60 per cent complete. Energisation of the new reduction cells, which use EGA’s proprietary technology, is expected in three phases during 2021 with all the new reduction cells in production this year.

EGA has developed its own aluminium smelting technology in the UAE for more than 25 years. In 2020, EGA signed agreements that could lead to the export of its technology to Indonesia and Colombia.

Construction also continued on-track at the new highly-efficient power block at EGA Jebel Ali, which includes the first use in the global aluminium industry of a Siemens H-class gas turbine. The power block is under development by JA Power & Water Co, a joint venture formed by Mubadala Investment Company and Dubal Holding. EGA intends to buy power from the joint venture for 25 years following commissioning.

Full completion of the project is expected during the summer of 2021. The new power block is expected to lower greenhouse gas emissions from EGA's power-generation and aluminium-smelting operations at Jebel Ali by some 10 percent. NOx emissions are expected to decrease by as much as 58 percent.

EGA’s safety performance continued to compare favourably with global industry benchmarks. There were no Lost Time Injuries – injuries leading to time off work - at any EGA operation in 2020.

In 2020 EGA’s Total Recordable Injury Frequency Rate, a broader measure of safety performance, was 1.34 per million hours worked for the UAE and Guinea combined, compared to 1.9 in 2019. According to the International Aluminium Institute, the global average Total Recordable Injury Frequency Rate in the aluminium industry in 2019 (the latest year for which data is available) was 3.9 per million hours worked.

EGA implemented extensive measures to protect its workforce from COVID-19, with most roles unable to be performed from home. This included changing some ways of working and expanding EGA-administered accommodation. EGA has administered more than 155,000 COVID-19 tests on its sites in the UAE since the start of the COVID-19 pandemic. In Guinea, GAC, with much of its operations in relatively remote areas, focused on quarantine measures to protect its workforce supported by COVID-19 testing to gain access to GAC sites.

EGA began a voluntary vaccination programme at both its Al Taweelah and Jebel Ali sites in the UAE in January 2021, with over 4,500 employees so far receiving at least one dose, 66 per cent of its UAE workforce. More than 4,000 on-site contractors have also voluntarily received at least one vaccination dose so far at EGA. COVID-19 infection rates at EGA have been on average significantly below the reported rates for the populations as a whole in both the UAE and Guinea since early in the pandemic.

Contacts at EGA:
Simon Buerk
sbuerk@ega.ae

Fatima Al Mutawa
falmutawa@ega.ae  

About EGA 

Emirates Global Aluminium is equally-owned by Mubadala Investment Company of Abu Dhabi and the Investment Corporation of Dubai.

It is the largest industrial company in the United Arab Emirates outside the oil and gas industry, and the largest company jointly owned by the two Emirates.

EGA is an integrated aluminium producer, with operations from bauxite mining to the production of cast primary aluminium. EGA operates aluminium smelters in Jebel Ali and Al Taweelah, an alumina refinery in Al Taweelah and a bauxite mine and associated export facilities in the Republic of Guinea.

EGA’s aluminium is the second largest made-in-the UAE export after oil and gas. In 2020, EGA sold 2.52 million tonnes of cast metal. EGA is the only UAE producer and makes the UAE the fifth largest aluminium producing nation in the world.

EGA has more than 400 customers in over 50 countries. In recent years over 80 per cent of EGA’s production has been value added products, one of the highest proportions of any aluminium company in the world. In 2020, value added products made up 72 per cent of total sales despite EGA’s flexing of its product mix in response to fluctuating market demand caused by COVID-19’s impact on world manufacturing.

EGA’s aluminium is primarily used in the construction, automotive, packaging, aerospace and electronics industries.

Around 10 per cent of EGA’s aluminium production is sold in the UAE to around 26 downstream aluminium companies that make products with EGA’s aluminium. The growing broader aluminium sector in the UAE supports 60,950 jobs. EGA itself employs over 7,000 of these people including almost 1,200 UAE Nationals.

EGA has focused on technology development for over 25 years. EGA has used its own technology for every smelter expansion since the 1990s and has retrofitted all its older production lines. In 2016 EGA became the first UAE industrial company to licence its core industrial process technology internationally.

As a corporate citizen of the UAE, EGA aspires in all its operations to be measured amongst the world’s leading metals and mining companies in meeting its environmental and social responsibilities. In 2017, EGA became the first Middle East headquartered company to join the Aluminium Stewardship Initiative, a global programme to foster greater sustainability and transparency in the aluminium industry. In 2019, EGA’s Al Taweelah site became the first in the Middle East to receive certification from ASI for its sustainability practices and performance. ASI certification is the aluminium industry’s internationally recognised standard for environmental and social performance and governance.

In 2021, EGA began production of CelestiAL solar aluminium, produced with solar power from the Mohammed Bin Rashid Al Maktoum Solar Park on the outskirts of Dubai. EGA is the first company in the world to make aluminium commercially using the power of the sun.

EGA was formed in 2014 through the merger of Dubai Aluminium and Emirates Aluminium.

EGA’s Jebel Ali aluminium smelter began production as DUBAL in 1979. At almost five square kilometres, this site is five times bigger than Dubai Mall.

EMAL started production in 2009 and its Al Taweelah aluminium smelter was the largest single-site aluminium smelter in the world when completed. EGA’s Al Taweelah site is five times bigger than Al Maryah Island at six square kilometres.

EGA has its own power stations at both sites, producing electricity to meet its needs. EGA’s electricity generation capacity is 5,450 megawatts, making EGA the third largest electricity generator in the UAE after the Dubai and Abu Dhabi utilities. EGA also produces water through desalination units at its power plants.

EGA began production at Al Taweelah alumina refinery in April 2019. EGA’s alumina refinery is the first in the UAE and only the second in the Middle East. The project reduces the UAE’s dependence on imported alumina and supplies 40 per cent of EGA’s needs.

Bauxite exports from Guinea Alumina Corporation, EGA’s wholly-owned subsidiary in Guinea, began in August 2019. The GAC project was one of the largest greenfield investments in Guinea in over 40 years. 

For more information on EGA please visit www.ega.ae.  

© Press Release 2021