THE CURRENT SITUATION AND FUTURE WITH REGARDS TO ALUMINIUM PRODUCTION IN THE MIDDLE EAST
In a little over 40 years the Middle East has become a major global hub in the primary aluminium industry. Five smelters have been established within the Gulf Co-operation Council (“GCC”) region, this year boasting a collective capacity of 3.6 million tonnes per annum — approximately 13.2 per cent of total world production. With aluminium consumption in the GCC being approximately 606,000 metric tonnes per annum, more than 3 million tonnes of primary aluminium are exported across the world. A wide variety of producttypes is produced, from standard, sow and T-ingots, through billets, to sheet ingot and rolling slab; plus anode- and busbars. Two GCC smelters — Aluminium Bahrain (“ALBA”) and Dubai Aluminium (“DUBAL”) — have been in operation since 1971 and 1979 respectively. The others are new-
comers: Oman’s Sohar Aluminium began operating in 2008; while commissioning of both Emirates Aluminium Company Limited (“EMAL”) and Qatar Aluminium (“Qatalum”) began in 2009. A sixth smelter — Ma’aden — is under construction in Saudi Arabia which, together with planned expansions at the existing smelters, will lift the GCC’s annual production capacity to almost 5 million tonnes by 2015. The two smelters in the United Arab Emirates (“UAE”) — DUBAL and EMAL — will account for approximately 50 per cent of this volume. An entirely state-owned enterprise, DUBAL operates a one million tonne per annum primary aluminium smelter (1,573 reduction cells) at Jebel Ali, Dubai — one of the largest single-site operations of its kind in the world — and in 2011 produced 1,014,795 tonnes of hot metal. The complex also comprises a power plant (2,350 MW at 30°C),
a large carbon plant, the world’s largest aluminium casting operations, a 30 million gallon per day desalination plant, plus a comprehensive auxiliary and support infrastructure. DUBAL is renowned internationally for its premium purity, high quality products and services; and its commitment to sustainable development through conscious efforts to maximize the health and safety people, reduce the impact of its operations on the environment, and invest in the social and economic development of the community. Dedicated programmes support the Emiratization goals of the UAE, including targeted recruitment, skills development, management training and strategic career planning. Approximately 92 per cent of DUBAL’s annual production is exported globally. More than 300 customers in over 50 countries worldwide are served, the company’s key markets being Asia, Europe, the Middle East North Africa
9
(“MENA”) region and the Americas. Evidencing DUBAL’s determination to develop its own smelting technology, in-house experts have successfully developed DX Reduction Technology — which offers enhanced energy efficiency and productivity levels yet lower environmental emissions than comparative technologies. A demonstration line of 40 DX Reduction Technology pots at DUBAL’s Jebel Ali site started-up in February 2008. Since then the amperage has gradually increased from 340 kA to 380 kA with stable results, demonstrating capability to operate at high amperage. Subsequently, DUBAL’s DX Technology cells have been redesigned to operate at even higher amperages. Five new generation cells, built in a pilot line, have been operating at 420 kA. The improved technology — known as DX+ Reduction Technology — is underpinned by the inherently robust DX Reduction Technology. A green-field development at Al Taweelah, Abu Dhabi, EMAL is owned jointly by DUBAL and Mubadala Development Company (in equal shareholding). Energizing of the 756 reduction cells (in two potlines) at EMAL Phase I took place between 1 December 2009 and 31 December 2010. Full production capacity of 750,000 tonnes per annum was reached within three years of the project’s inception (four months ahead of schedule). The company, which currently serves over 150 customers, already enjoys a strong reputation for sound safety management, wellbeing programmes for employees and adopting global best practices to minimize its environmental footprint — the latter entrenched through the implementation of DUBAL’s DX Reduction Technology. Initiatives are also in place to harness Emirati talent through job-creation, engaging the community in
10
GLOBAL ISSUES
corporate activities and celebrating the cultural heritage of the UAE. In July 2011, EMAL announced Phase II of its planned development. The EMAL Phase II project will entail the construction of a new potline within the EMAL complex. The line will comprise 444 DX+ Reduction Technology cells, powered by increasing the onsite power plant capacity to 3,000 MW. This will yield boost annual production capacity by 520,000 metric tonnes. Simultaneously, the technology installed in EMAL Phase I is upgraded, increasing the production yield from the existing 756 cells to 800,000 tonnes per annum. Thus, on completion of EMAL Phase II in 2014, EMAL’s annual production capacity will be around 1.3 million tonnes, making EMAL one of the largest single-site primary aluminium producers in the world. In the meantime, questions are being asked regarding the impact of this year’s political turmoil in the Middle East on the regional aluminium industry. Reflecting the inherent stability of the GCC, only Bahrain and Oman were involved — and in both cases the situation was well-contained. The bulk of the unrest has been in North Africa, plus Syria and Yemen. Naturally, the instability introduced new challenges to the regional industry. For example, a minimal loss in demand (about 0.1 per cent) has been experienced; and the cost of business has risen slightly due to the increased political risk and associated rise in freight insurance. There have also been minor logistical issues and investor confidence in the region may have declined temporarily. On the up-side, the crisis has created opportunities as a result of
the accelerated implementation of social and infrastructural development projects in the region. Published figures indicate US $985 billion in infrastructure investment within the GCC between 2010 and 2015, including large-scale projects such as the GCC rail network, which will lead to increased metal demand and thus greater growth potential than previously predicted. Within the UAE alone, demand for aluminium is expected to reach 9 per cent over the next five years. This will be driven by the development of a long-term sustainable downstream industry, an initiative promoted strongly by both EMAL and DUBAL the latter, is fully aligned with the Abu Dhabi Economic Vision 2030 to diversify the economy. The Khalifa Industrial Zone Abu Dhabi, where EMAL is located, will play a key role. One of the world’s largest industrial zones, the 417 square kilometer KIZAD is attracting downstream semifabricated aluminium producers to avail liquid metal or value-added products from EMAL. Indeed, several agreements have already been signed. These developments, together with the anticipated growth in annual global demand for aluminium from the current 42 million tonnes to 70 million tonnes by 2020, bode well for the rapidly growing, internationally acclaimed Middle East sector. Especially given the ideal strategic location of the region “in the centre of the world”, which ensures easy access to both established and emerging markets. As such, the outlook for the Middle Eastern aluminium industry is very positive.
11