Aluminium industry's future looks bright despite the challenges, says EGA

United Arab Emirates: The global aluminium industry will have to confront several major challenges as it looks to sustain its steady growth trajectory through 2020 and beyond. So said Walid Al Attar (Chief Marketing Officer: Emirates Global Aluminium PJSC (" EGA ")) in an address entitled "Why the aluminium market stands at a crossroad: Tough challenges and critical decisions" that he delivered at Harbor's 7th Aluminium Outlook Summit ("Harbor 2014") which took place during early-June in Chicago, USA.

Al Attar - a 30-year industry veteran who is responsible for developing and implementing EGA 's global marketing and sales strategy - began by reiterating analysts' predictions that the primary aluminium industry would continue at a compound growth rate of 5.8% per year for this decade to top 70 million tonnes by 2020, driven largely by demand from the construction, transportation and electrical sectors. Additional production capacity is planned for the period, primarily in China (mainly for internal consumption) and the Middle East - but will be inadequate to meet the greater demand. However, the much-needed capacity expansions are unlikely due to the prevailing low London Metal Exchange ("LME") price, which is substantially below the level required to justify investments. "The capacity shortage is likely to affect value-added products most, as it is here that there is a particular need for additional investment in production capacity to cater for the anticipated growth in demand," said Al Attar. "This challenge highlights the need for additional smelter capacity and casting facilities that specialise in value-added products like extrusion billets, foundry alloys and sheet ingots."

Another key challenge is price diversion, due to the increased proportion of premiums in the all-in aluminium price. "Ingot premiums today are five times higher than six years ago - and this is having severe repercussions on the supply chain, especially in industries that do not have a pass-through formula for premiums, such as automotive wheel-makers," commented Al Attar.

From a Middle East perspective, a particular challenge to the primary aluminium industry is the duty barriers - created through the imposition of import tariffs - which are hampering trade opportunities. As Al Attar explained, "The imposition of import tariffs in certain regions - such as Brazil, India and Europe - is distorting the free flow of aluminium by unfairly benefiting other aluminium producing regions, disadvantaging regions such as the Middle East and Russia, and adding costs to the semi-fabricators in those markets."

EGA is the jointly-owned aluminium conglomerate formed by Mubadala Development Corporation and Investment Corporation of Dubai that combines the businesses of two of the UAE's flagship industrial companies, Dubai Aluminium PJSC (" DUBAL ") and Emirates Aluminium PJSC (" EMAL "). EGA has a total production capacity of 2.4 million tonnes per year following the full commissioning of EMAL Phase II mid-June - placing EGA among the top five aluminium producers in the world outside China. Indeed, EGA is well-placed to benefit from the increased global demand for value-added products, which form the major share of the company's annual production.

EGA was the lead sponsor of Harbor 2014, which is the largest and most strategic aluminium market gathering in the Americas. EGA 's participation reflected the group's stature in the global and regional industry (being the largest producer in the Middle East) and the importance of the region as a market to EGA . The Americas accounted for nearly 15% of EGA 's global sales in 2013 - more than 280,000 tonnes in all - and this is expected to grow in the short-term.

About EGA , DUBAL and EMAL
Emirates Global Aluminium (" EGA ") is a jointly-held, equal-ownership company formed by Mubadala Development Company of Abu Dhabi and the Investment Corporation of Dubai combining their respective aluminium industry interests. EGA 's core operating entities are Dubai Aluminium (" DUBAL ") and Emirates Aluminium (" EMAL "), whose combined annual production capacity reached 2.4 million tonnes per annum ("tpa") by mid-2014, which makes EGA the fifth largest aluminium producer in the world. The UAE-based EGA also owns Guinea Alumina Corporation ("GAC"), and a stake in Cameroon Alumina Limited ("CAL"), both being bauxite mine and alumina refinery development projects. In addition, EGA has plans for significant local growth and international expansion.

DUBAL , where commissioning began in 1979, operates one of the world's largest single-site primary aluminium smelters. The DUBAL complex, built on a 4.75 square kilometre site in Jebel Ali, Dubai, comprises a 1 million tpa smelter, a 2,350 MW power station (at 30¢ªC), a large carbon plant, extensive casting operations (more than 1.2 million tpa), a water desalination plant, dock and other facilities. A quality-focused, customer-centred and innovation-drive organization, DUBAL holds ISO 9001, ISO 14001, ISO/TS 16949, ISO/IEC 20000-1, ISO/IEC 27001, ISO 29990, ISO 50001 and OHSAS 18001 certification. DUBAL also has investments in bauxite/alumina development projects in Brazil and Cameroon; and in a calciner plant in China.

EMAL is designed to become another of the world's largest single-site primary aluminium smelters. The EMAL complex, housed on a 6 square kilometre site in Al Taweelah, Abu Dhabi, has been built in two phases. Phase I, which was fully commissioned by the end of 2010, is the world's largest greenfield smelter development and currently has a smelter capacity of 800,000 tpa. Commissioning of Phase II, comprising the world's single-longest potline (444 cells) with a design capacity of 520,000 tpa, began mid-September 2013. Full ramp-up is scheduled for completion by end-2014. Once fully operational, EMAL will have an annual hot metal production capacity of 1.3 million tpa. EMAL holds ISO 9001 accreditation and Nebosh certification in Occupational Health and Safety.

The combined DUBAL - EMAL portfolio comprises high quality aluminium products in four main forms: foundry alloy (automotive applications); billet (construction, industrial, transportation and automotive forging); high purity aluminium (electronics and aerospace); and sheet ingot (packaging, lithographic sheets and the automotive industry). Busbars and anode bars are also made for the electrolytic process used to produce primary aluminium from alumina ore. Over 350 customers are served in at least 64 countries, predominantly in Asia, Europe, MENA region and the Americas.

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