Heavy investments will largely expand smelters in Gulf hydrocarbon producers and this will allow them to control more than 10 per cent of the world’s total aluminium output, according to a US report.
Besides large investments, the six Gulf Cooperation Council (GCC) countries possess many advantages that give them an edge over smelter projects in other countries, mainly their abundant gas resources and advanced infrastructure, said Frost and Sullivan, a key global market researcher.
“The GCC aluminium industry is set to grow to the stature of global aluminium destination next to oil wealth which is set to grow further to 10-11 per cent of global aluminium production,” it said in a report sent to Emirates 24/7.
“The GCC possesses some great advantages like, low power cost (4 cents / Kwhr) and gas price ($2-4 MMBTU), favorable logistics owing to well connected airports and sea ports to all global destinations and skilled manpower sustaining over four decades to provide knowledge transfer to the local manpower adding to their employment opportunities.”
The report said GCC smelters are now actively engaged in downstream development to instigate local demand and value addition to primary aluminium production. Another advantage to GCC downstream.
Industry is the availability of liquid metal which provides further competitive edge on production cost over other international players, it added.
“This is also appropriately supported by the respective governing ministries to promote the aluminium Industries’ development by facilitating rapid clearance and awarding subsidies for the green field projects.”
Official data showed the six members-- the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman-- are expected to pump nearly $25 billion into new aluminium projects and expansion of their existing smelters in the next 12 years as part of an industrial drive intended to reduce reliance on unpredictable oil sales.
Sitting atop nearly 45 per cent of the world’s oil and 25 per cent of the global gas wealth, the six members have invested nearly $30 billion in aluminium smelters, almost a sixth of their total industrial investments of $180 billion.
“The aluminium sector has largely developed to become one of the main pillars of economic activity in the region and contribute actively to economic diversification programmes,” said Mahmoud Al Dailami, secretary general of the aluminium council in the six-nation Gulf Cooperation Council (GCC).
“Investments in the aluminium sector in the GCC are expected to climb to nearly $55 billion in 2022 from around $30 billion at present…the investments will cover new projects and expansion of existing smelters,” he told a recent industry conference in Saudi Arabia.
His figures showed the UAE has become the dominant aluminium producer in the Middle East, pumping 1.8 million tonnes a year from its smelters in Dubai and Abu Dhabi, accounting for nearly 40 per cent of the region
According to the Doha-based Gulf Organization for Industrial Consulting (GCOI), new investments include around $5.8 billion in Qatar’s smelter, which was inaugurated in 2010 with a production capacity of 585,000 tonnes per year. About $eight billion has also been pumped by Emal in Abu Dhabi to push up output to 1.4 million tones while more expansions are on the cards in Dubai and Bahrain, where the region’s first smelters were set up.
Saudi Arabia, the world’s oil powerhouse, is also planning to set up a $3.8-billion smelter while Oman has completed its first aluminium plant in Sohar.
Follow Emirates 24|7 on Google News.