No pricing issues for now: GAC

For the time being, the newly launched Gulf Aluminium Council (GAC), a consortium of six primary aluminium producers in the region, will not get involved in marketing or pricing issues, according to a senior official.

Additionally, Dubai will be the headquarters of the organisation, it was revealed yesterday.

"Most probably, that [pricing] might be a long-term consideration but right now, we need to work together to represent the aluminium industry in the Gulf. We need to look at the health and safety issues in the industry, synergise between the companies to reduce costs and also work with purchasing costs," said Abdulla JM Kalban, President and CEO of Dubal and board-elected Chairman of GAC.

"We are seeing positive signs in terms of construction in Saudi Arabia, Qatar and the UAE, and so are still bullish about the region."

The GAC will represent, promote and protect the interests of the aluminium industry within the region. The board comprises the chief executive officers of the six founding member companies, five of which have established smelters in the region, namely Aluminium Bahrain (Alba), Dubai Aluminium Company (Dubal), Emirates Aluminium (Emal), Qatar Aluminium (Qatalum), and Sohar Aluminium (Sohar), in Oman. The sixth member is Saudi Mining Company (Ma'aden), which has announced plans to develop a fully integrated complex in Saudi Arabia (reportedly with Alcoa).

Plans may include expanding the council's membership to embrace the full spectrum of the aluminium industry in the region (primary production and end-user product manufacture). The body will also work closely with relevant local and international associations such as the International Aluminium Institute, European Aluminium Association and Aluminium Federation.

Mahmood Daylami, who has been appointed as general secretary of GAC, said: "We will have special events to support the industry. Most of the smelters in the Gulf are not feeding the area but the international demand. Hence the fluctuations of the local demand are not necessarily a determinant of its growth because the export-oriented nature of the business."

Addressing concerns of stiffer competition, Khalban said that GAC's aims is to support the industry and make sure that the smelters are co-ordinating and supporting each other and build on the synergy. "Yes, it is a small region with low costs of energy but we can co-operate in logistics and purchasing power," he said.

Added Daylami: "We can learn from each other the best practices but we will not be involved in marketing. When it comes to competition, that is healthy. Let us not forget that the board of directors is drawn from major players in the region and are keen to support the synergy."

Production set to rise

Collectively, the operational smelters at Alba, Dubal and Sohar produced more than two million metric tonnes of primary aluminium in 2009 – equating to 5.6 per cent of the global market, it was revealed at the Meed-organised Middle East Aluminium 2010.

Following the successful start-up of Emal and Qatalum, both of which produced their first cast metal in December last year, it is expected that the total production by GAC members will exceed three million metric tonnes in 2010. Ultimately, the region's production volumes could be doubled to six million metric tonnes per annum in the future, the exact timing being dependent on the impact of market influences on the planned expansions of production capacity at the new smelters (specifically Sohar and Emal) and the commissioning date of Ma'aden (currently anticipated in 2013), said data.

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