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28 March 2024

GCC set to double its aluminium output

Published
By Nadim Kawach

Gulf oil producers are pushing ahead with mega aluminium projects that will enable them to double their market share in the long term and turn them into dominant global exporters of the metal, a semi-official study said yesterday.

The GCC states already control more than six per cent of the global aluminium output and massive investments in the next 12 years will more than double that share despite an expected surge in global output, the Emirates Industrial Bank (EIB) said.

But the bank stressed that the GCC needs to deal with challenges arising from the enormous financial costs of securing gas supplies for such projects as natural gas resources in most of the states are associated with oil.

With the recent commissioning of a Sohar aluminium smelter in Oman, the GCC's combined production of the metal grew to nearly 2.2 million tonnes per year, including around 900,000 tonnes produced by each Dubal in Dubai and Alba in Bahrain.

Over the next two years, production is projected to jump by around 58 per cent to 3.5 million tonnes per year before rocketing to nine million tonnes in 2020, nearly 13 per cent of the world's output, EIB said in bulletin sent to Emirates Business.

"This large increase will be a result of the completion of the Abu Dhabi smelter which is expected to produce 1.4 million tonnes, another smelter in Saudi Arabia with an equivalent capacity and a project in Kuwait with an output of around 500,000 tonnes per year at a cost of $3.5 billion (Dh12.8bn). Qatar has also approved plans to build a $3bn smelter with a capacity of around 585,000 tonnes," it said.

"Dubai and Bahrain are pressing ahead with expansion plans that will boost their combined production to 2.5 million tonnes and this will push the GCC's combined aluminium output capacity to around seven million tonnes in 2015 and nine million tonnes in 2020."

Experts expect the total investment in the GCC's aluminium industry to exceed $40bn by 2020 and said this would give a strong push to long-term programmes by member states to diversify their oil-reliant economies.

The UAE and Bahrain were the first Gulf countries to set up smelters more than 30 years ago. Dubai's Dubal aluminium plant in Jebel Ali produced a record 935,000 tonnes last year while output from Bahrain's Alba smelter stood at 830,000 tonnes.

There are plans to expand the two smelters to face growing demand from their customers in Japan, South Korea and other key Asian consumers. Besides expansion, Dubal has teamed up with Abu Dhabi's Mubadala Development Company to build the world's largest aluminium complex in Taweela just outside the capital.

The plant will initially produce around 720,000 tonnes when it is launched in 2010 but capacity in the second phase of construction will surge to nearly 1.4 million tonnes per year to turn it into the largest single-site smelter in the world.

In Oman, the aluminium plant, which will go into full swing this year, has an initial output capacity of 325,000 tonnes per year. The project is jointly owned by the Oman Government and the Abu Dhabi Water and Electricity Authority.

Aluminium projects in the GCC are part of overall industrial plans aimed at diversifying their economies away from unpredictable crude oil sales, which still account for at least two thirds of their national income.

The GCC members have pumped in excess of $130bn into the non-oil manufacturing sector to build light to medium industries, including petrochemicals, building materials, foodstuffs, paper, furniture, home appliances and machinery.

From a negligible share two decades ago, the industrial sector has become the second largest component of the GDP in most members while massive investments boosted the GCC's combined non-oil industrial exports to more than $20bn last year from less than $5bn a year during the 1980s.