Gulf set to become aluminum powerhouse

The aluminum industry in the GCC is on the brink of becoming a leading global contributor, according to a new publication issued by Deloitte Middle East. The report titled “GCC: Tomorrow’s Aluminum Powerhouse” pointed out that the UAE, Oman, Bahrain, and Qatar are all home to some of the largest aluminum smelters in the world.

Five smelters exist in the GCC today with a combined production capacity of just under 3.6 million tons. Their cumulative contribution to total global production in 2010 was estimated at seven percent, said the report.

Considering the fact that Maaden, a sixth smelter in Saudi Arabia, is set to become operational by 2013 while Emal’s robust expansion is scheduled for completion by 2014, the GCC is poised to become a primary aluminum production powerhouse with the expectation that the region will contribute to over 13 percent of the world’s aluminum production by 2013.

“Given the affordability of power and labor in the GCC region, the local aluminum industry as a whole is conducive to investment,” said Mahmood Daylami, secretary general of the Gulf Aluminum Council, (GAC).

“Increasing costs is becoming critical for more and more primary producers around the globe, and therefore the Gulf presents a viable and attractive venue for investment in aluminum production across the entire industry’s value chain. Furthermore, the GCC smelters are evaluating and studying future expansion plans to increase their global production contribution to a cumulative capacity estimated at 7 million tons per annum by 2020.”

According to the Deloitte publication, the downstream aluminum industry within the GCC can be said to be underdeveloped, and therefore ripe for investment, with an estimated 20 percent of locally produced primary aluminum is consumed within the GCC and 50 percent of locally utilized aluminum is processed further in secondary production and exported to international markets.

The Deloitte publication also points out that another significant opportunity exists to develop the aluminum recycling activity in the region.

The cost advantages for industrial activity in the region coupled with increasing support and encouragement for investment in downstream aluminum operations create an attractive opportunity for investment.

“Although the regional aluminum industry is not without its challenges, its close proximity to end-user markets both throughout the Middle East and Europe is a strong advantage,” said Firas Eid, Consulting partner at Deloitte Middle East. “Additionally, strong economic growth across the GCC, particularly in aluminum-intensive industries, the most notable of which is construction, will further fuel the region’s growth in aluminum production and solidify the region as a global leader and pioneer in the industry.”


Article by Links Group on Dec 1st 2011
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