Arab Aluminium Supplement 2014 PDF

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ACCELERATING TO LASTING GROWTH

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INTRODUCTION
04 Leading edge of low-cost output
Access to economical power resources, the latest technologies and strong

government backing have been key to the growth of the Arab aluminium industries
PREMIUMS
08 Premium management
The evolution, level and future of aluminium premiums have become one of the
hottest topics in the sector. What are the implications for the Middle East industry?
SMELTER FACT-FILES
10 The key smelter data
Fact-files for each of the regions established smelters illustrate the main
investments in the expansion of primary production. Capacities, products
and markets show the industrys local and international importance
PROJECT FOCUS
17 Maaden-Alcoa makes progress
The regions newest smelter and processing complex is well advanced,

and several milestones have been reached this year
TECHNOLOGY
20 Primary progress
Several major primary producers are developing more advanced smelting

technologies, which promise lower energy consumption and reduced
environmental emissions
DOWNSTREAM
23 Adapting downstream strategy to market
Aluminium markets have been difficult over the past few years, demanding
particular strategies to serve the downstream sector
26 Downstream projects progress
Projects to expand the Arab aluminium industrys downstream processing

capacity continue to emerge
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November 2014 | Arab aluminium | 3
Arab aluminium 2014

Introduction
Leading edge of
low-cost output
While the recent evolving nature of global
aluminium markets is far from that expected 5-6
years ago, the advantages of low-cost production
remain as relevant as ever. With its access to
economical power resources, the latest
technologies and strong government backing,
the continued growth of the Arab aluminium
industry reinforces that point
4 | Arab aluminium | November 2014
MAADEN-ALCOA
MaadenAlcoas new rolling mill has increased the

proportion of flat rolled products made by the Arab
aluminium industrys downstream sector
A quick comparison of the WBMS primary

aluminium production figures by region for
the first eight months of this year confirms the
pattern a regular observer of global
aluminium markets would now expect. Asias
output increased by 8.5% year-on-year to
20.6 million tonnes in January-August 2014,
mostly driven by burgeoning Chinese smelting
capacity. Output in the Americas has fallen by
10.4% to 4.14 million tonnes in the same
comparison, reflecting some regional smelter
production cutbacks, while Europes
production has also declined a little to just
short of 5.2 million tonnes.
The only region bucking the global trend to
adjust production levels downwards,
excluding China, is the Middle East, where
output over the period increased in Bahrain,
home to Alba, Oman, hosting Sohar
Aluminium, and notably Saudi Arabia, where
the MaadenAlcoa joint venture continues to
make progress.
In the UAE, where the Emal and Dubal
smelters have joined forces as constituent
parts of Emirates Global Aluminium (EGA),
output in the first eight months has climbed
by an impressive 16.5% to nearly 1.5 million
tonnes, as a consequence of smelter
expansion. Emirates Aluminium (Emal)
started up the last of the 444 cells of the Emal
phase II potline expansion in mid-2014,
raising the companys production capacity to
1.32 million tpy. At 1.7 km long, the new
potline is the longest in the global aluminium
industry.
The latest details of the capacities, products
and markets for Arab aluminium smelters are
given in the smelter fact-file section of this
MB supplement. Another article looks at
progress in aluminium smelting technology,
both in the region (notably DX and DX+) and
globally, with higher currents and lower MWh/
tonne figures to the fore.
Cost is king
While primary consumption figures (see table)
appear to paint a rosy picture for supplydemand balance with physical demand
up in all regions, except Africa, in JanuaryAugust 2014 by comparison with the same
period last year and with total world
consumption outstripping global supply
according to the WBMS data stubbornly high
stock levels, financing deals and premiums
remain the factors that producers, consumers,
traders, analysts and investors alike remain
focused on.
With aluminium premiums hitting record
highs in all regions as of mid-October, it
seems remarkable now to recall that at the
height of the global financial crisis they
essentially fell to zero. The path leading to
large premiums is a familiar one to aluminium
market participants, but to recap briefly
and noting that premiums have now grown to

have significance for the Middle Easts smelters
as much as other regions the availability of
very cheap money with exceptionally low
interest rates, introduced as a means of
economic stability and recovery, provided the
fuel for financing aluminium metal.
Investors realised an opportunity to make
a virtually risk-free return from a persistent
contango in aluminium on the LME, which
more than offset the costs of paying to store
the metal. The ensuing growth in aluminium
inventories financed, the warehouse queues
that resulted from them, and the incentives
that warehouses were able to pay to attract
metal, became key characteristics of the
market.
Now, although subsiding, stocks remain at
unusually high levels, both within and
outside the LME network, and the physical
market consequently remains tight since,
despite a flatter forward curve for aluminium,
there is still money to be made from the
contango while interest rates remain low. By
some recent estimates global demand for
physical metal exceeds current production
levels, following significant curtailments in
available smelter capacity, outside China and
the Middle East, totalling around 1.5 million
tpy of cuts over 2013-14.
Premiums to stay
While some experienced members of
theindustry fondly recall pre-crisis days when
regional premiums for aluminium
represented low-single-figure percentages of
the base LME price, by contrast with the
20-25% levels they have reached now, the
launch of CMEs aluminium premium contract
in the USA and the LMEs own plans
to launch aluminium premium contracts
in both cases to enable a means to assist
in hedging the totalall-in aluminium price
are an indication that the significance of
aluminium premiums is unlikely to diminish
soon. The article following this introduction
looks at developments in premiums in more
detail.
So where do Arab aluminium smelters sit
against this background? Prevailing market
conditions are not what they, or any other
players, would have forecast 5-10 years ago,
when plans for the regions primary
aluminium production expansion seen since
then were conceived.
Nevertheless, they are now well placed to
react to regional market swings, becoming
nascent global market makers for premiums
according to some analysts. A geographical
location from which Asian and European, as
well as US, markets can be served offers that
potential. And while much of the regions
smelting capacity is being used to make
value-added products to order on contract, a
minority proportion of swing capacity is

available in the Arab smelter fleet to supply
whichever region is offering the best
premiums within a quarter or two.
Metal Bulletins news coverage of the Arab
aluminium industry over the past 12 months
has provided insights into its participants
strategies, both upstream and downstream.
EGAs ceo Abdulla Kalban recently confirmed
that feasibility studies for an alumina refinery
in the United Arab Emirates (UAE) are under
way. EGA already owns 100% of Guinea
Alumina Corp (GAC), which will start bauxite
production in 2017 and construction of a 2
million tpy alumina refinery from 2018.
Additionally, the company owns 45% of
Cameroon Alumina Ltd (CAL) which also has an
alumina refinery project in development.
But these investments will not be adequate
to fully supply the company, which now has
2.8 million tpy of primary casting capacity,
and so EGA will construct the regions second
alumina refinery, after MaadenAlcoa in
Saudi Arabia.
EGA has made substantial investments in
bauxite mining and alumina refinery
projects, Kalban said at MBs 29th
International Aluminium Conference in Abu
Dhabi. For the UAE refinery project, a
comprehensive feasibility study is now under
way.
Metal Bulletin also reported in September this
year that Alba has tasked its strategic department
with looking for a potential alumina refinery
project, its chief operations officer said. We
have still not found the right project but we
have been trying, Isa Al Ansari said. Alba
buys 1.8 million tpy of alumina in order to
produce aluminium, and that this will rise in
the future, he told MBs 29th International
Aluminium Conference.
Alba produced 464,012 tonnes of aluminium
in the first half of the year, up 2.5% year-onyear. The company is targeting aluminium
production of 912,000 tonnes this year and is
awaiting final government sign-off for a
further expansion, he told the conference.
We have completed the feasibility study
into line six at the smelter, and we have
approval for the gas supply, he said. Initial
capital expenditure will be $2.5 billion and
the project will take around 36 months to
complete.
As Qatalums ceo Tom Petter Johansen told
MB in June this year, the company wants to
smelt aluminium for the world. Qatalum has
a global perspective for its premium extrusion
ingots and foundry alloys, Johansen said.
We see large opportunities for expansion
based on future regional and global demand.
On the regions downstream sector, he said:
Qatalum is an aluminium smelter and will
not invest in downstream activities, but will
proactively support the establishment of a
Primary production*
Region
2013
2013
2014
Jan-Aug Jan-Aug
Europe
7,831.5
5,215.1
5,196.1
Africa
1,823.0
1,198.0
1,175.2
Egypt
325.3
211.6
200.5
Asia
28,986.6
19,016.8
20,631.4
Bahrain
912.7
613.6
619.7
Iran
331.9
217.1
208.3
Oman
354.0
239.3
240.2
Qatar
634.0
422.7
409.0
Saudi Arabia
187.0
103.8
404.7
UAE
1,847.9
1,267.1
1,476.4
Americas
6,823.8
4,625.9
4,143.8
Oceania
2,101.6
1,393.0
1,378.9
World
47,566.4 31,448.7 32,525.4
Primary consumption*
Region
2013
2013
2014
Jan-Aug Jan-Aug
Europe
7,605.6
5,129.7
5,459.1
Africa
836.9
544.9
529.9
Egypt
254.3 163.2 146.2
Asia
30,657.0
20,065.0
21,321.0
Bahrain 322.8 215.2 215.2
Iran
175.0
116.6
116.6
Saudi Arabia
94.8
63.2
63.2
UAE
600.0
400.0
400.0
Americas
6,661.5
4,610.6
4,908.4
Oceania
362.9
246.0
285.4
World**
46,575.1 30,902.2 32,828.9
*000 tonnes. Source: WBMS. Some latest data are provisional.
**World total is adjusted to include estimated unrecorded demand.
downstream industry in Qatar. He added

that Qatalum offers favourable supply terms
and conditions and is keen to share its
knowledge base.
As a fully integrated project from bauxite
mining through to aluminium rolling,
MaadenAlcoas project is investing along
the full supply chain. At the downstream end,
it has both canstock and automotive
aluminium sheet in its sights, with both local
and international markets in mind.
Downstream developments
Out of the total primary aluminium produced
in the Gulf Co-operation Council states, about
70% is exported to international markets and
30% goes to downstream markets, which
export roughly half of their products
according to Gulf Aluminium Council data.
And what progress in providing aluminium
from the regions smelters to growing local
clusters of industries downstream? As the last
two articles of our supplement explain in
detail, the history and level of downstream
activity differs from one country to the next,
but there is a general consensus that
continued expansion of local aluminium
processing capacity is a good thing. However,
while the smelters are ready to support the
local downstream industry, the general
tendency now is to leave independent
companies to invest in it.
Turning local vision

into a global reality
Backed by our dedicated workforce, commited to operational performance and

passion to excel, we have consistently surpassed our production records. Poised to
grow, we will continue to deliver the highest value to our employees, customers,
suppliers and shareholders alike.
We are a plus-912,000 metric tonne aluminium producer, and we aim higher.
Since 1971, making Bahrain proud.

albasmelter.com
Arab aluminium 2014

Premiums
Premium management
The evolution, level and future of aluminium
premiums has become the hottest topic for
aluminium markets. Dan Smith looks at all
three and considers potential implications for
the Middle East
This year has proved to be a particularly
difficult one for anyone in the Middle East
trying to manage aluminium price risk. While
the global economic backdrop has generally
been very gloomy and copper prices have
been depressed, aluminium prices have
trended higher and physical premiums have
spiked to record levels in markets like the USA
and Japan. The all-in aluminium price,
using the US spot price for example, is
currently up by around 20% from a year ago,
with two-thirds of this increase coming from
the premium component.
While at first glance the Middle East appears
to be somewhat detached from the current
fierce debate around LME warehousing and
queues in Europe and the USA, producers
need to be aware that LME warehouses could
easily become the worlds second largest
supplier of metal should forward curves
flatten, financing deals unwind and
warehouses lose their appetite for metal.
With most smelters in the Middle East
heavily reliant on export markets, the threat
of diminished demand from overseas is
significant, particularly given that backdrop
of a loss of momentum in world economic
activity in the past few months.
Consumers in the Middle East are also more
exposed than ever before to additional price
risk from high and volatile premiums, which
will directly impact their free cash flow and
profitability in the absence of an effective
market hedge. While the LME is developing a
new hedging mechanism for premiums, this
will not be available until Q2 2015 at the
earliest. Complacency is certainly not an
option for either producers or consumers in
the region.
There are several key questions for the
industry to consider at this point. First, how
are the latest developments on the LME likely
to impact prices and premiums? Secondly,
will financing deals continue to absorb excess
metal if smelters in the region continue to
expand? And thirdly, what mechanisms are
being developed to manage price risk from
premiums and will they be effective?
Supplies from stocks

The reform of LME warehousing is certainly
an important issue to understand
particularly the impact of queues and
load-out rates. In theory LME warehouses
are supposed to act as a buyer of last resort
absorbing metal during market surpluses
and being a supplier in times of market
shortage but that is not the reality in
todays marketplace and warehouse stocks
have become a new unpredictable element
of both supply and demand.
A surge in inflows since the most recent
financial crisis saw LME warehouse stocks
soar above 5 million tonnes and available
inventory that is inventory that is not stuck
in a queue still stands at around 2 million
tonnes in mid-October. Theoretically todays
total inventory of 4.5 million tonnes creates
the potential for the LME stocks to become
the worlds second largest supply of metal

after China, if economic circumstances turn
against warehouses and the aluminium
financing trade.
After a lengthy legal battle concluding that
the exchange could proceed with its
proposals to change its warehouse rules, the
LME announced in October 2014 that it would
be proceeding with its load-in/load-out
(LILO) rule, designed to cut warehouse
queues to 50 days and further warehouse
reform is due to follow. Potentially this
reform could include banning rental charges
for metal stuck in a queue, which would
dramatically alter the economics of LME
warehousing firms and would either force
metal to be released to the wider market,
which is what consumers are hoping for, or
would divert metal away from the LME into
other, far less transparent, stockpiles.
Queues shorten, premiums soar

In reality the problem of lengthy queues has
already started to ease, as warehouses have
reacted in anticipation of the new rules and
regime. Queues had formed in Antwerp,
Detroit, New Orleans and Vlissingen, but by
the end of September 2014, only two
warehouse locations (Detroit and Vlissingen)
had aluminium queues: 702 days for Detroit
Aluminium stock levels continue to loom over global aluminium markets
Europe
Japan
USA
450
300
6/
7/
14
6/
7/
13
6/
7/
12
6/
7/
11
6/
7/
10
6/
7/
09
6/
7/
08
6/
7/
07
150
Source: Bloomberg
LME queues started to build in late 2011 (cancelled warrants, kt)

1800
1600
N America
Netherlands
1400
1200
1000
800
600
400
4
1/1
2/
3
1/1
2/
2
1/1
2/
1
1/1
2/
0
1/1
2/
1/0
2/
200
8
The charts show the recent trend in premium

levels in different regions and the build-up
in cancelled warrants in Detroit and
Vlissingen. There are two obvious points to
note. First, premiums started to trend higher
from the start of 2009, while cancelled
warrant queues started to build from late
2011, showing that multiple factors have
been at work in driving premiums up.
Secondly, there has not been much
regional differentiation, with the major
consuming regions of Europe, Japan and the
USA all trending higher together. This tends
to point towards a global structural change
in the market rather than logistical
bottlenecks in a particular country or region
as some have suggested.
What is known is that interest rates have
been held at extremely low levels since the
2008/2009 financial crisis, creating a hunt for
yield which has flowed in record amounts
into aluminium financing deals. Global
aluminium demand also bounced back
strongly in 2010, which increased
competition for surplus aluminium units.
Both these elements certainly contributed to
higher premiums, although nobody knows
for sure how powerful each element would
have been in isolation.
The major consuming regions outside
China have also seen increasing regional
deficits, as local demand has expanded
against a background of inadequate supply
growth. This has meant that higher
premiums are needed to encourage metal to
be shipped from regions in surplus, such as
Russia, the Middle East and Oceania.
The USA, for example, increased its imports
of aluminium and aluminium alloy by 4.8%
in the first 7 months of this year, according to
600
1/0
Multiple factors
Spot premiums found a floor in 2009 ($/t)
2/
and 625 days for Vlissingen, compared with

end-April levels of 748 and 683, respectively.
What has surprised many though is that
while queues have come down premiums
have actually risen in recent months, leaving
many consumers frustrated and hoping for
further reform and regulation. According to
Metal Bulletin data, since the end of April spot
premiums for P1020 ingot have risen 32% in
Europe, 22% in the USA and 14% in Japan and
are now at record highs. Moreover, the
premium as a percentage of the LME base
price is at record levels. US premiums used to
be just 3% of the LME price back in 2008, but
this has risen sharply to around 25% in
mid-October 2014.
What is known for sure is that premiums
are still a hot talking point in the market, but
there is also a lack of consensus about why they
are so high, what the underlying cause is and
where they are likely to go next. It is a complex
picture worthy of further analysis here.
Source: Bloomberg
WBMS data. Imports from Russia rose 85%

year-on-year in the period, with the UAE
recording a 5.7% year-on-year gain. Japan
has seen a similar trend. Its imports of
aluminium and aluminium alloy increased by
21% in the first 7 months of this year. Imports
from Russia rose 54% year-on-year in the
period, with the UAE recording a 40%
year-on-year gain. Overall, the world outside
China has moved into deficit, increasing
competition for surplus metal, helping to
push up premium levels in multiple locations.
Hedging all-in price

The major exchanges in the West have
responded to consumer complaints and
concerns and new contracts are being
developed to hedge the all-in aluminium
price. CME Group launched the first contract
in May 2014, with the LME planning on its
own launch in Q2 2015.
So far the CME contract has been slow to
attract liquidity, with consumers proving
unwilling to use it as a pricing basis yet,
despite its guarantee that queue length will
not exceed 50 days. The LME is going through
a consultation phase with its members, but
the current plan is that queue size would be
limited to 34 days (as 3% of metal inventory
must be delivered every day). For now the
pressure has been put back on the industry
to use the contracts and create the necessary
volume of trade to make them a success.
Premiums to trend lower?

Given all of these factors, premiums are
difficult to forecast, but it seems likely that
the trend will be lower from here on a
multi-year view, given the economic and
political landscape.
First, growth in the world economic cycle is
easing back, with the JP Morgan global
manufacturing PMI falling back to 52.2 in
September, suggesting weaker demand
growth and less competition for aluminium.
Also, economic growth in the USA is strong
and interest rate rises still seem likely to
come in 2015, as central banks start to
normalise monetary policy and other
countries look likely to slowly follow. Higher
US rates will make it increasingly difficult to
sustain high levels of inventory financing in
aluminium and the broader commodities
complex.
Lastly, of course, the LME remains under
pressure to bring down warehouse queues
and banks remain under pressure to cut back
on non-core activities, particularly in
physical commodities. All of these elements
should press aluminium premiums lower as
2015 comes along and moving into 2016,
helping consumers in the Middle East and
reducing the pressure for further change on
the LME and in the wider industry.
The author is ceo of Dan Smith Commodities
Research Ltd
Arab aluminium 2014

Smelter fact-files
Key smelter data

EMIRATES GLOBAL ALUMINIUM (EGA), UAE
Products and markets

> EGA supplies more than 350 customers in
almost 70 countries. The product mix
mid-2014 comprised billet for construction,
industrial, transportation and automotive
industries (46%); re-melt products,
comprising foundry alloys for automotive
applications (28%) and high-purity
aluminium for electronics and aerospace

purposes (13%); and sheet ingot for
packaging, lithographic sheets and the
automotive industry (13%). The companys
major markets are Asia (41%); countries in
the Middle East and North Africa region
(21%); Europe (24%); and the Americas
(14%)
Owners
> EGA is jointly held in equal ownership by
Mubadala Development Company and
Investment Corporation of Dubai
Staff
> About 6,850 (as of October 2014), of whom
18% are UAE nationals

Dubal

(Jebel Ali Operations)
Location & development
Site area
4.8 sq km
Construction schedule
Built in multiple sequential phases
First cell energized
October 1979
Last cell energized
February 2008
Emal
ega
> Emirates Global Aluminium (EGA) has two

primary aluminium smelter assets: Dubai
Aluminium (Dubal) and Emirates
Aluminium (Emal). The UAE-based
business also owns Guinea Alumina
Corporation (GAC), a strategic bauxite
mining and alumina refinery development
project in Guinea, West Africa
Emal
ega
Introduction
Dubal
ega
Arab aluminium smelters are expanding operations and investments both

upstream and down. The latest data for capacities, products and markets
listed here show their growing importance regionally and internationally
Emal
(Al Taweelah Operations)
6 sq km
Built in two phases
December 2009
June 2014
Reduction
No. of cells
1,573
1,200
No. of potlines
7
3
Hot metal production capacity
1,035,000 metric tpy
1,320,000 metric tpy
Technologies
D18; D18+; CD20; D20; DX; DX+ Ultra
DX; DX+
Casting
Total casting capacity
> 1,200,000 tpy
> 1,600,000 tpy
Sow
52,500 tpy
330,000 tpy
Standard ingots
245,000 tpy
570,000 tpy
Properzi ingots
98,500 tpy
Horizontal direct casting

86,000 tpy
Vertical direct casting

704,000 tpy
330,000 tpy
Sheet ingot

370,000 tpy
Power generation
Generation capacity
2,350 MW
3,100 MW
Gas turbines
23
9
Steam turbines
7
4
Seawater desalination
Technology
Multi-stage evaporation
Reverse osmosis
Capacity
30 million gallons/day
3.75 million gallons/day
Carbon
Greenmill capacity
72 tph
1.08 million tpy
Baked anodes
380,000/year
700,000/year
Trust...
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Eduard-Schloemann-Strasse 4
40237 Dsseldorf, Germany
Phone: +49 211 881-0

Fax:
+49 211 881-4902
E-mail: communications@sms-siemag.com
Internet: www.sms-siemag.com
Arab aluminium 2014

Smelter fact-files
ALUMINIUM BAHRAIN BSC (Alba)

Investment Company (20.62%); General
Public (10%)
Staff
> Over 3,000, of whom about 87% are
Bahraini nationals
Finance
> Alba shares have been listed on the
Bahrain Bourse as well as the London Stock
Exchange since December 2010
ALBA
Schedule
Capacity/production
imports over 1.5 million tpy of alumina in

shipments of up to 60,000 tonnes from
suppliers in Australasia
> Over 912,000 metric tonnes per year of

primary aluminium production
> First metal produced in 1971 from a 120,000

tpy smelter. Capacity was steadily raised,
reaching 450,000 tpy in 1992. Potline 5
started in 2005
> In July 2012, Alba hired BNP Paribas to
assess financing requirements for a sixth
potline. Capex is estimated at $2.5 billion
as per the feasibility study. Bechtel
Canada was awarded a Letter of Intent to
perform a Bankable Feasibility Study,
which was completed in the first quarter
of 2014
> In July 2014, Alba received approvals for the
natural gas allocation for its Line 6
expansion project. Once Line 6 is onstream,
it will have a planned expansion of
production of 400,000 tpy to bring the
total capacity to almost 1.3 million tpy
Location
Owners
Major equipment
> Bahrain 10 km from the smelters own

marine terminal for imports of alumina,
petroleum coke and pitch
> Alba launched an Initial Public Offering

(IPO) in November 2010. The IPO raised
$338 million for Bahraini sovereign wealth
fund Bahrain Mumtalakat Holding
Company.
> Current shareholders: Bahrain Mumtalakat
Holding Company (69.38%); Sabic
> Own power plants with a capacity of

2,217 MW
> Dedicated carbon plant
> 550,000 tpy coke calcining plant
> Five reduction lines with a total of 1,384
cells
> Pechiney and Hydro technology for
potlines running at 129, 153, 358 and 372 kA
> Three casthouses
Raw materials
> Purchased on long-term contracts from
several international suppliers. Alba
Egyptian Aluminium (Egyptalum)

Capacity/production
> 320,000 tpy

with 320,000 tpy capacity. Plans to expand
capacity to 400,000 tpy
Location
Major equipment
> Nag Hammady HQ. Smelter 100 km north of

Luxor
> Operates 12 potrooms
Finance
> Smelter produces slab, ingot, T-bar, billet

and wire rod. Associated rolling mill
produces hot and cold rolled sheet, coil and
plate for Egyptian Aluminium. Extruded
products are also added with 17,000 tpy
capacity. Fabricators and international
markets. Exports from the port in
Alexandria. Markets include Europe, the
USA, the Arab Gulf, Turkey, North Africa,
Africa and Asia
> Listed on the Egyptian Stock Exchange
Schedule
> Initiated in 1972 with an inaugural capacity
of 100,000 tpy
> First two potlines constructed in 1975 and
expanded to five in 1983. New prebaked
potline no. 6 started in October 1997. In 2010
completely changed to prebaked technology
> Alba produces extrusion ingot as cut-tolength billet or log, foundry alloys, liquid
metal, sheet ingot (slab) for rolling, and
standard ingot. Slabs for rolling were
introduced in 2010 and the company plans
to keep value-added product sales above
two-thirds of its revenue. Sales in 2013:
extrusion billet (40%); liquid metal (31%);
rolling slab (13%); foundry alloys (13%);
ingot (3%) . Bahrain has the biggest
downstream sector amongst the GCC
countries. Almost half of Albas output is
supplied to downstream industries in
Bahrain, as liquid metal, billet and slab.
Sales in 2013: Bahrain (46%); Other Mena
(25%); Asia (14%); Europe (11%); America
(4%)
Aluminium
High Capacity Green Anode plants

Gas and Fume Treatment centers in the fields
of High Amperage Electrolysis Pots and Anode
Baking Furnaces
Firing and Process Control Systems on Anode
Baking Furnaces
Bath Processing plants
Liquid Pitch Marine terminals
Casthouse furnaces
Driving progress
www.fivesgroup.com
A5_187x120mm_Metal Bulletin_Arabal2014.indd 1
21/10/2014 16:05:45
Arab aluminium 2014

Smelter fact-files
QATAR ALUMINIUM (Qatalum)

Capacity/production
General Electric and Doosan Heavy

Industries & Construction, includes four gas
turbines and two steam turbines operating
in a combined cycle
> Qatalums casthouse has a capacity of
625,000 tpy to accommodate scrap recycling
> Design capacity of 585,000 tpy of primary

aluminium
> Current production level of 600,000 tpy of
primary aluminium
Location
> Mesaieed Industrial City outside Doha
Raw materials
> Main products are extrusion ingots and

foundry alloys for a global customer base in
the global transport, building and

consumer goods industries. Metal is being
shipped to the Asian and North American
markets. Hydro will also retain the option
of selling more metal into Qatalums
domestic market longer term. The Qatar
Investment Authority is encouraging
private investment in downstream
industries that will take metal from the
smelter
> Alumina imported from Brazil and Australia
Owners
> Joint venture between Norsk Hydro (50%)
and Qatar Petroleum (50%)
Staff
> 1,200
Finance
> Initial estimated capital investment in the
Qatalum project: $5.7 billion
Schedule
> Commissioned in December 2009
> Full production capacity of 585,000 tpy of
primary aluminium was reached in
September 2011
> The smelter has the potential to double its
production capacity to more than 1.2 million
tpy, but no decision to expand has been
made
> Twin 1.2 kilometre-long potlines, a carbon
plant, port and storage facilities, and a
captive power plant
> The smelter uses Hydros HAL275 technology,
running at 300 kA, and the dedicated 1,350
MW power plant, built for Qatalum by
hydro
Major equipment
SOHAR ALUMINIUM, OMAN

Capacity / production
Owners
> A 375,000 capacity primary aluminium

smelter with a 1.2 km long single potline
comprising 360 pots
> Joint venture of Oman Oil (40%), Abu

Dhabi National Energy Company PJSC-TAQA
(a subsidiary of Abu Dhabi Water &
Electricity Authority) (40%) and Rio Tinto
Alcan (20%)
Location
> Sohar, Oman
Staff
> 72% of Sohar Aluminiums workforce of
1,000 individuals are Omani nationals and
the company plans to increase that
proportion further
Raw materials
> Alumina for the plant is imported from Rio
Tinto Alcans refineries
Finance
> Total project cost for phase 1: $2.5 billion
Schedule
> Sohar Aluminium company was formed in
September 2004
> The first pot started operating in June
2008 and phase one reached full capacity
in February 2009. Operation at 375 kA was
achieved in December 2010 and 1 millionth
tonne of aluminium was produced in

August 2011. Cumulative 2 million tonnes
of aluminium was produced in May 2014
Major equipment
> Bechtel (for the EPCM contract) and Alstom
were major contractors for the
construction of the smelter, which has its
own 1,000 MW dedicated power plant. The
smelter uses AP36 technology running at
375 kA

> The casthouse produces ingots, sows and
liquid metal. The ingots and sows are sold
to Rio Tinto Alcan for delivery to markets
including China, Malaysia and Indonesia
sohar aluminium
> Sohar Aluminiums long-term plan is to

use around 60% of the smelters
aluminium production for local
companies and to export the balance.
Oman Aluminium Processing Industries
Ltd (Oapil) is one of the smelters
downstream customers (see downstream
article on page 26)
> A second downstream customer, Oman
Aluminium Rolling Company (Oarc) has
started up and will supply to the food
container and food-preservation foil
markets, as well as automotive and air
conditioner markets. The first production
from OARC commenced in 2013
> Omans downstream aluminium
sector continues development and
space has been set aside at Sohar for
more industries to take liquid metal from
the smelter. Development of the Sohar
Free Zone is expected to attract further
partners to Oman. Sohar Aluminium has
its own dedicated port facility in the
Sohar Industrial Port Complex (a joint
venture between Oman and the Port of
Rotterdam)
MAADENALCOA JV, Saudi Arabia

Locations
Investment
> Bauxite mine at Al Baiitha, near Quiba, Saudi

Arabia
> Alumina refinery, aluminium smelter and
hot rolling mill at Ras Al Khair on the Gulf
Coast of Saudi Arabia, 90 km north of Jubail.
Ras Al Khair is the location for Maadens 77 sq
km minerals industry complex
> Total of $10.8 billion, including:

> $202 million engineering, procurement and
construction management (EPCM) contract
for the mine and refinery with Worley
Parsons and Fluor Enterprises
> $73 million contract for engineering and
oversight services with Fluor Enterprises
> $590 million EPC-LSTK contract for the
execution of the rolling mill
> $74 million contract with Fluor Arabia for
overall project management services and
engineering/procurement services for the
infrastructure at Ras Al Khair
> 4 million tpy bauxite mine, in operation

since the second quarter of 2014
> 1.8 million tpy alumina refinery. The first
alumina is expected to be produced in Q4
2014.
> 740,000 tpy aluminium smelter. First hot
metal was produced in December 2012.
Now fully operational. It is expected to
produce 600,000 tonnes of aluminium in
2014.
> 380,000 tpy rolling mill. First hot coil was
produced in June 2014. A 100,000 tpy
expansion including a cold mill, heat
treating line and finishing line is expected
to produce its first auto coil in Q4 2014. The
mill complex also has a large UBC recycling
facility
Ownership
> Maaden, the Saudi Arabian Mining Co
(74.9%)
> Alcoa (25.1%, with a right to increase its share
to 40%)
Raw materials
> Bauxite feedstock for the planned alumina
refinery is transported by rail from the new
mine at Al Baitha
> Alcoa supplies alumina to the smelter from
its Bunbury Port facility in Western Australia
until the refinery starts up

> While packaging, including body-,
end- and tab-stock for aluminium
beverage cans, will be the major end-use
market sector, it will also serve the foil
stock, building and construction and
automotive industries for the Middle East
and beyond
Finance
> The joint venture partners signed $4 billion of
the financing for the smelter and rolling mill
project with 17 financial institutions,
including Public Investment Fund in 2010.
> On October 16 2011, Maaden and Alcoa signed
a financing agreement for $1 billion, in
addition to $1 billion loan approval from
Saudi Arabias Public Investment Fund.
> Further funding of around $160 million by the
Saudi Industrial Development Fund was to be
evaluated
> The remaining $1.4 billion will be financed by
the jv project partners on a pro rata basis
Major equipment
> Ingot and billet casting systems from
Wagstaff and Alcoa
MAADEN-ALCOA
Initial capacities
> Hot and cold rolling mills from SMS Siemag

> Coating line from Germanys BWG Bergwerkund Walzwerk-Maschinenbau
> Preheat furnaces from Ebner
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Arab aluminium 2014

Project focus
Maaden-Alcoa
makes progress
The Maaden-Alcoa aluminium complex in
Saudi Arabia has taken several further steps
forward, reports Myra Pinkham
Work on the MaadenAlcoa integrated
aluminium joint venture complex in Saudi
Arabia is progressing.
Several milestones were reached in the past
year or so. Its smelter overcame start-up
problems last year, is now fully operational,
and generated profits in Q3 this year. The
complex produced its first production-grade
can sheet coil this June, and made its first
shipment of bauxite from its own mine in Q2. It
also expects to refine its first alumina for
primary aluminium production later this year.
When fully up and running it is expected that
this joint venture of the Saudi Arabian Mining Co
(Maaden) and US-based Alcoa will become the
worlds largest integrated aluminium facility, and
the lowest cost one in the Middle East.
It is exciting to see our investment start to
pay off, William Oplinger, Alcoas executive
vice-president and cfo said during his
companys recent third-quarter earnings
conference call.
Our mission is to build a minerals and
metals industry in Saudi Arabia that contributes
to sustainable economic diversification and
shareholder value while providing high-value
job opportunities for Saudis and a reliable
supply of quality products for our global
customers, Khalid Mudaifer, Maadens
president and ceo, said in a press statement. It
is also expected to help Alcoa to lower its cost
base and pivot to higher growth markets, Klaus
Kleinfeld, its chairman and ceo, states.
Maaden has the majority ownership (74.9%)

of the $10.8 billion joint venture, which
includes a 4 million tpy bauxite mine, a 1.8
million tpy alumina refinery, a 740,000 tpy
primary aluminium smelter, a 380,000 tpy
rolling mill and a large used beverage can (UBC)
recycling facility.
Alcoa, which has the remaining 25.1% share
of the project, has the option eventually to
increase that holding to 40%, which several
industry observers say they expect it to do,
especially given its stated goal to further cut its
costs. The Maaden project alone is expected to
move Alcoa down two percentage points on
both its refining and smelting cost curves.
Primary production
It first appeared that the Maaden project
would ramp up its smelter, located in Ras Al
Khair with the refinery, rolling mill and
recycling facility, ahead of schedule after
producing its first hot metal there in December
2012, just 25 months after the venture broke
ground. However, last October, when the
smelter was all but complete, it hit a snag and
was forced to temporarily shut down one of its
two potlines owing to a period of pot instability
a condition that an Alcoa spokeswoman says
is not uncommon during the ramp-up stage.
The second potline remained operating at an
accelerated rate.
By the beginning of this year the venture had
restarted the temporarily shut potline and it
MAADEN-ALCOA
Access to its own bauxite mine is one

of MaadenAlcoas project advantages
subsequently recommenced commercial
production. Alcoa says that not only did the
now fully operational smelter contribute to its
parent companies Q3 profits, but it is still
expected to produce 600,000 tonnes of
primary aluminium this year (by contrast with
the 740,000 tonnes it was originally expected
to produce). The expected output for 2015 is
740,000 tonnes now that the smelter is at full
capacity, but its capacity could be expanded
further still sometime later.
Meanwhile the ventures bauxite mine,
which is located in Al Baiitha, near Quiba,
Saudi Arabia, shipped its first bauxite by rail to
the projects alumina refinery in Q2. Now about
73% complete, Phase 2 work on the mine is on
time and on budget, Alcoa says.
The projects refinery is now 98% complete
and is expected to produce its first alumina
sometime during Q4 2014. Until it is fully up and
running the projects smelter is being fed by a
supply of alumina from Alcoas Bunbury Port
facility in Western Australia. The 1.8 million tpy
alumina refinery was also designed for
possible future expansion.
Rolled products
Maadens rolling mill produced its first
production-grade hot-rolled can sheet coil in
June 2014. Production of its first automotive
grade coil is expected by the end of this year.
Mudaifer called this a big step forward,
noting that the Maaden rolling mill is the first
in the Middle East capable of producing
food-grade can sheet, as well as sheet for
automotive and construction applications. The
mill includes a cold mill, heat treating line and
finishing line enabling it to produce
auto-grade sheet and is 99.7% complete. It
has the latest in rolling mill technology,
including fully automated coil and scrap
transport and storage facilities.
From the projects onset, Maadens partners
have said that in addition to producing body-,
end- and tab-stock for cans, the rolling mill
would also serve the foil stock, building and
construction and automotive industries.
Although it is expected that much of the auto
sheet produced at the complex will be
exported to the USA, Europe and China, given
the lack of automotive stampers in the MENA
region, Alcoa says that much of Maadens auto
capacity, like that of its Davenport, Iowa, and
Alcoa, Tennessee, mills is almost fully booked.
The Maaden facility also incorporates a UBC
recycling facility capable of processing billions
of cans a year. This will foster the beginning of a
new recycling industry in Saudi Arabia,
Maaden says.
The author is a specialist writer based in New York
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Arab aluminium 2014

Technology
Primary progress
Many major aluminium producers are also
engaged in advancing smelter technology.
Steve Karpel reviews the scope and progress
of current projects
cell current has increased. The various AP

versions are now responsible for some 6.8
million tpy of global aluminium capacity, says
the company, with another 2 million tpy under
construction.
The most recent advancement to come on
stream is AP60, for which a 38-pot
demonstration plant was inaugurated in
January this year at RTAs Arvida Aluminium
Smelter, Jonquire, Canada. The first phase of
the plant comprises 31 first-generation and
seven second-generation cells. The former
operate at a current of 570 kA with an energy
Full-scale testing ahead

As it stands now, the demonstration plant has
a capacity of 60,000 tpy. The next phase of the
project is to complete the amperage increase
to 600 kA, stabilise the pot operation and fully
demonstrate its capabilities on an industrial
scale. The latest results include an output of
4.407 tpd per pot at 570 kA, with a current
efficiency of 95.9% and energy consumption
of under 13.0 MWh/tonne.
When phase two is complete after expansion
with second-generation cells, the total
capacity will have increased to 460,000 tpy.
This is partially limited by the space available
at Jonquire, says the company: a full-length
single AP60 potline would have a capacity of
up to 760,000 tpy. Each pot is 18 metres long,
while each carbon anode weighs over 1.4
tonnes, is baked for two weeks and is
consumed in 28 days.
Rio Tinto Alcan
The basics of aluminium smelting were

established way back in 1886 by Charles Martin
Hall and Paul Hroult, but the technology has
been subject to continuous development and
improvement ever since. To a large extent this
has been pushed forward by the energyintensive nature of the electrolysis of alumina,
since improvements in energy efficiency are
likely to have a marked effect on production
costs.
Rather than slowing, advances in smelting
technology have gained momentum in recent
years, and this article reviews some of the
main developments that have been launched,
or are in the pipeline.
Dubai Aluminium, now part of Emirates
Global Aluminium (EGA), has launched its
latest DX+ technology commercially for the
first time at its sister company Emirates
Aluminium (Emal). Derived from its original DX
technology first commissioned commercially
in 2008 at Dubal, DX+ is used in the new
potline 3 at Emal, to complete its phase II
expansion.
Emals potline 3 was completed in June 2014
with the start-up of the last of the 444 pots. At
1.7 km, it is the worlds longest potline and
adds 520,000 tpy to the companys capacity,
which now totals 1.32 million tpy. The DX+ cells
operate at 440 kA, which is planned to be
increased in time to 460 kA. The energy
consumption on Dubals own DX+ pilot line
over 14 months has been 13.2 MWh/tonne, with
each pot producing 3.36 tpd of aluminium.
Dubal also emphasises the low anode effect
frequency of DX+ of 0.06/pot per day, while the
companys proprietary control logic restricts
the duration of anode effects to an average of
less than 10 seconds, resulting in low PFC
emissions.
The Emal phase II expansion encompassed
an upgrade of its first two DX-based potlines,
which raises their capacity by 50,000 tpy to
800,000 tpy.
Rio Tinto Alcans AP system has become a
major production technology since it was
launched by Pechiney in 1970. Starting with
AP13, employing a current of 130,000 amps, the
technology has steadily evolved into AP18,
AP30 and other numerical designations as the
consumption of 13.3 MWh/tonne of

aluminium. Each pot produces 4.3 tpd of
aluminium. The second-generation cells
operate at 600 kA with an energy consumption
of less than 13.0 MWh/tonne, and a pot
output of over 4.5 tpd.
Rio Tinto Alcans AP60 potline has been launched in Canada, and will in time be expanded
to 460,000 tpy. AP series smelters produce millions of tonnes of aluminium worldwide
Environmental authorisation has been

received for the Arvida expansion, but the
timing of this will depend on market
conditions, says a Rio Tinto spokeswoman:
When market conditions improve, we will be
able to move forward with the project.
Rio Tinto Alcan says it is using AP60 as the
basis for an even more energy-efficient
technology termed APXe being developed at its
r&d centre in France. The company is also
pursuing further upgrades of its earlier AP
systems, targeting higher currents and greater
energy efficiencies. These projects are based
around two established platforms: AP2X and
AP3X/4X. The target for the former is to raise the
amperage to 250 kA and for AP4X to over 400
kA. Energy consumption for both of 12.3 MWh/
tonne has been demonstrated, says RTA, while
the target is to reach 12.0 MWh/tonne.
A range of AP upgrades is being carried out at
existing smelters. At RTAs Kitimat plant,
British Columbia, Canada, the existing
Sderberg lines are being shut down and
replaced by a 384-pot line featuring AP40
technology operating at 405 kA and 13.15
MWh/tonne of aluminium. The modernisation
project is on track to deliver its first metal in
the first half of 2015. The upgrade will increase
the capacity from 280,000 tpy to 420,000 tpy.
Rio Tinto Alcan has been gradually
upgrading the Alouette smelter in Canada
(40% RTA-owned) to a low-energy pot design
termed AP40LE. The modernisation
programme was started in October 2012 and as
each pot reaches the end of its life, it is
replaced by a new AP40LE type with an energy
consumption of 12.5-12.7 MWh/tonne,
depending on the anode assembly. The new
pots fit precisely into the existing
infrastructure, and have the same anode
dimensions, reducing the costs of the
upgrade. Full deployment of all the pots as
AP40LE at the planned 395 kA current is
expected to start from January 2017, when the
capacity will be over 630,000 tpy.
In Oman, Sohar Aluminium (20%
RTA-owned) is gradually converting its AP37
pots to higher-current AP39 as part of an
upgrade programme, which will add about
25,000 tpy of capacity to reach nearly 400,000
tpy. The conversion is expected to be complete
at the end of this year.
Hydros pilot line

Hydro is another aluminium producer that
has been pursuing its own developments. It
has been testing its latest cell technology,
HAL4e, at its rdal Research Centre, Norway,
for some years. Having obtained a consistent
performance from the cells running at 420 kA,
the next step is the construction of a full-scale
pilot line at the companys Karmy site in
Norway. This will have a capacity of 70,000 tpy
and could begin in 2017 at the earliest, says Hydro.
It was announced in June that Enova, a

public enterprise that supports new energy
and climate-related technology, has decided
to contribute Nkr 1.5 billion towards the
estimated total cost of Nkr 3.6 billion ($580
million) for the pilot plant. This contribution is
subject to the approval of the European Free
Trade Associations surveillance authority ESA,
and is also subject to other elements being in
place, such as an adequate energy supply at a
competitive cost.
Hydros goal is to realise a groundbreaking
new technology that can reduce energy
consumption and emissions from Norwegian
industry, said Hydro president and ceo Svein
Richard Brandtzaeg.
The HAL4e project is targeting an energy
efficiency of 12.3 MWh/tonne. At the same
time, an even more advanced technology
termed HAL4e Ultra (originally called HAL4see)
will also be studied at Karmy, which aims to
reduce consumption to a maximum of 12.0
MWh/tonne. Twelve HAL4e Ultra cells will be
built in addition to the pilot line.
It is envisaged that some of the HAL4e
techniques will also be applicable to existing,
earlier generation, cell designs.
Hydro has also opened a pilot plant in rdal
to trial a more cost-effective method of
producing carbon anodes. The new
technology will be able to process more
variations in raw material quality, and has the
potential to also reduce carbon anode
consumption. This project will cost about
Nkr20 million ($3.2 million), partly funded by
Innovation Norway and the Research Council
of Norway, and will be tested for several years
before it is ready for commercialisation.
Extensive smelting research has also been
carried out in the worlds dominant primary
aluminium producer, China. After seven years
work, a technology using 600 kA current in a
super-large cell has been successfully
developed at the Liancheng plant of
Aluminium Corporation of China (Chinalco). It
is based on a design by Shenyang Aluminium
& Magnesium Engineering & Research
Institute. The technology has been tested and
certified by the China Nonferrous Metals
Industry Association and the Ministry of
Science & Technology.
The energy consumption is 12.136 MWh/
tonne, making it what Chinalco describes as
the worlds most energy-efficient aluminium
cell. Some of the techniques that were used
for the new cell have also been applied to
existing lower-amperage cells and have
achieved energy-savings here as well, the
company reported.
In Russia, United Company Rusal has also
been developing its own proprietary smelting
technologies in the 21st century, including
more efficient and environmentallysustainable Sderberg cells.
Its RA-400 pre-bake cell smelting

technology was initially launched in 2005
with a cell current of 425 kA, an energy
consumption of 13.54 MWh/tonne and a cell
capacity of 3.016 tpd of aluminium. More
recently the company has carried out a $70
million RA-400 modernisation project which
has reduced energy consumption to under
12.90 MWh/tonne, raised the amperage to
435 kA and improved current efficiency to
95.5%.
RA-400 technology is fully ready for
application in the companys new 750,000 tpy
Taishet smelter, said a Rusal spokeswoman.
In addition, there are plans to use RA-400
for external projects where Rusal will be the
technology supplier, she added. The Taishet
project is currently on hold pending improved
aluminium market conditions.
The next advance from RA-400 is the
companys RA-500 technology, which will
operate at a cell current of 520 kA and produce
some 3.96 tpd of aluminium per pot. At
present, the designs of the cell and the
planned pilot area at the Sayanogorsk smelter
are complete, but a decision on the
construction of a pilot line is being delayed
until the aluminium market improves, says
Rusal.
Retrofitting upgrade
In addition to the above pre-baked anode
systems, Rusal has also developed an
improved Sderberg cell which it can retrofit
to many of its smelters that employ this less
efficient and more polluting technology. The
new design, EcoSderberg, employs a
number of innovations, including a colloidal
anode paste that contains a much lower
proportion of pitch compared with standard
anode paste. This, together with an improved
gas evacuation system, results in a substantial
reduction in emissions. There will also be an
expected reduction in cell energy
consumption of 300 kWh/tonne of
aluminium.
Rusal plans to convert nearly 2.1 million tpy
of its smelting capacity to EcoSderberg before
2020, out of its existing Sderberg capacity of
2.3 million tpy. This includes all the S-8BM
and S-8B cells at the Krasnoyarsk, Bratsk,
Irkutsk and Novokuznetsk smelters, while the
Sderberg potlines equipped with C-2 and C-3
cells will be converted to pre-bake
technology.
The most radical advance that Rusal is
working on is a groundbreaking inert anode
technology that does not employ carbon
anodes, and which emits oxygen as the only
by-product: all hazardous carbon-based
emissions are eliminated. Bench testing of a
prototype cell is being carried out, and it is
planned to carry out industrial testing in a
potroom in 2015, said the spokeswoman.
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Arab aluminium 2014

Downstream
Adapting downstream
strategy to market
The unexpectedly difficult markets for aluminium
over the past few years were not what the
builders of the Middle Easts aluminium industry
had expected. Metal Bulletin managing director
Raju Daswani outlines impacts on the regions
downstream strategies
tightened and the forward spreads narrowed
not enough to rebalance markets however.
The result has been a spike in physical
premiums and GCC smelters have been well
placed to supply into this physical market
deficit. Consumers in net importing regions are
having to compete for this material by offering
ever higher premiums.
Export focus
The GCC exported almost 2 million tonnes of
value-added products in 2013, compared with
GCC aluminium production versus consumption

7,000
Consumption
Production
Alba line 6
GCC balance
6,000
Sohar II
5,000
4,000
3,000
2,000
1,000
0
20
18
f
f
17
20
20
16
f
f
15
20
f
14
20
20
20
13
12
11
20
09
20
10
20
20
08
07
20
20
06
05
20
20
0
20
03
-2,000
-1,000
Source: Metal Bulletin Research
GCC value added products exports
Asia
1,300
1,200
1,098.3
1,100
1,000
+24%
900
CAGR
Europe
800
700
546.4
USA
400
+71%
300
CAGR
Brazil
156.4
39.3
09
20
13
20
09
20
13
20
09
20
13
0
20
09
CAGR
332.2
200
100
463.6
+37%
2.8
13
500
20
600
20
(000 tonnes)
The production of primary aluminium in the

GCC countries has soared in recent years as the
region has successfully used aluminium as a
key component of its strategy to diversify
income from hydrocarbon dependence.
More expansions are on the horizon, the
most certain of which is the Alba potline 6, but
Sohar II is also a possibility. With the exception
of Sohar there has been a growing tendency to
produce a greater share of casthouse value
added products at the regions smelters. This
output is largely aimed at export markets, but
is there a case for more of this metal to remain
in the region?
All smelters in the region export at least half
of their output. Bahrain has the most
developed and diverse downstream sector,
although Saudi Arabia is catching up following
the recent start-up of the Maaden rolling mill.
Qatar, Oman and the UAE export a much greater
share of their output.
A look at developments in aluminium prices,
premiums and stocks demonstrates why these
smelters are so heavily focused on the export
markets. The weak aluminium prices of 2012 to
early 2014 took a heavy toll on high-cost
smelters in many regions including the USA,
Europe, Brazil, South Africa and Australia. This
has left great gaps in the aluminium supply
chains in these regions, even against a
backdrop of weak demand in some regions.
However, smelters in the GCC region came
nowhere near close to running at a loss in the
latest price downturn.
Under normal market conditions, the vast
stockpile of metal held in the LME warehouse
system would have been offered back to
consumers to fill the gap and rebalance the
market, but this time round that has not
occurred because much of the material held in
LME warehouses is being financed. Some deals
have been unwound as markets have
just under 1 million tonnes of unalloyed

material (see chart). Smelters are taking
advantage of the even greater strength in
value-added product premiums, particularly
for billet, but also for rolling slab and forging
ingots. There is no sign of the premiums
softening. In fact most are still trending
upwards.
Exports of remelt products (ingot, T-bar and
sow) from the GCC have increased in the past
five years. Asia has always been reliant on
imports, and imports of GCC ingot there have
remained unchanged. In Europe and the USA,
as smelter closures gathered momentum,
import reliance has increased.
Increases in the amount of alloyed material,
which tend to be value-added casthouse
products, such as billet, slab and foundry
ingot, have significantly outpaced exports of
remelt products. Exports of value-added
products are something of a half-way house.
Although they generate additional revenues for
the state, due to higher sales prices, additional
investment is limited to the casthouse rather
Source: Metal Bulletin Research, LME
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Quality
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Arab aluminium 2014

Downstream
China primary aluminium output (annualized)

China primary output [LHS]
SWOT analysis
First, the strengths, of which there are many. The
availability of aluminium from nearby smelters,
particularly when purchased in liquid form,
offers cost savings to fabricators and gives them
a competitive advantage. The region is well
positioned for exports to Europe, the USA and
Asia, as well as Northern Africa and India. It
already has a reputation for producing high
quality products. Expansion of the regions
aluminium industry provides diversity for
hydrocarbon-based economies and higher
value exports offer greater tax revenues.
Downstream plants also offer employment
opportunities for locals, while some GCC states
can take advantage of their duty-free trade
status with the USA.
Bahrains fabrication sector has developed
almost hand-in-hand with the expansions of
the Alba smelter. The country has a very diverse
fabrication base and is leading the way in the
GCC. Other states are looking at Bahrain as an
example of how to keep more aluminium at
home, and with it diversify their economies,
offer greater job prospects to locals and educate
a new generation of skilled workers.
Nevertheless, there are also clear weaknesses
both of the supply and demand side. Most
importantly perhaps, the cost benefit of locating
semi-fabrication plants in the GCC is not as clear
cut as for smelters; power makes up a much
smaller share of fabricating costs. In addition to
this, regional fabricating capacity has developed
Y-o-y % growth [RHS]

60%
25,000
Downstream investments
50%
40%
(000 tonnes)
20,000
30%
20%
15,000
10%
10,000
0%
-10%
5,000
-20%
-30%
4
l1
Au
g
Se
Ju
13
12
p
1
t1
Oc
10
No
v
09
c
09
0
Ja
n
The other option available to the GCC states is

investment in the downstream fabrication
sector producing goods destined either for
local markets, export markets or both. Installed
fabricating capacity would require close to 1.6
million tonnes of aluminium on an annual basis
when running at full capacity.
Until recently extrusion plants were the largest
consumers of aluminium in the GCC by far, but
with the start up of the Saudi and Oman rolling
mills in the past year, flat rolled products now
dominate.
Aluminium wire and cable has also received
significant investment in recent years, spurred
on by the regions electrification projects. There
are also a handful of smaller, more specialist
manufacturers of aluminium wheels,
aluminium powder, busbars and alloys. But so
far investment in fabricating, relative to the
amount of smelting capacity, lags significantly
by comparison with more developed economies.
Will this change? What are the strengths,
weaknesses, opportunities and threats for
further investment in downstream aluminium
facilities in the GCC?
70%
30,000
De
than fabricating facilities. Nevertheless, in a way

these are still exports of energy, with minimal
benefit for employment.
Source: Metal Bulletin Research
significantly in recent years, leaving the GCC well

supplied in many product lines.
New domestic sales opportunities are not
what they once were a greater deal of taking
over market share would be required for new
rolling mills in particular.
On the raw material supply side, some of the
regions smelters have already largely
committed their future production, leaving little
future availability. Some of the smelters with
shared private ownership may not be so keen to
sell locally, where contracted premiums can
often be lower than for export opportunities.
Even so, there are many opportunities for
further investment to raise the level of
fabrication in the region. Further smelter
expansions are highly likely in the next few
years: for example, Alba potline 6 and Sohar II.
Development of fabricating hubs around these
smelters are being encouraged in many states:
tax incentives and tax-free zones are being set
up to encourage investment and bring in
overseas technical knowledge.
Domestic sales potential will be boosted by
recovery in the construction sector: for example,
Expo 2020, regional rail projects, and regional
electrification projects. Export opportunities
into Europe, Asia and the USA are significant.
However, there are threats to further
investment in fabrication capacity in the GCC.
First, on the supply side the sale of LNG to
export destinations may prove more attractive
or lucrative to local governments, which in turn
would limit smelter expansion potential and
liquid metal availability. Secondly, on the
demand side, Chinese exports of
semi-fabricated products could flood markets,
which would make it difficult for GCC fabricators
to compete on price.
There are also threats posed by Chinese exports
of semis. Most importantly increases in Chinese
aluminium production are exceeding domestic
requirements. High-cost smelting capacity has
been shuttered in 2014, slowing growth rates.
Some of this is now being reactivated, however,
and new capacity in northwest China is also
being brought on stream.
Exports of primary metal are not a viable

option due to Chinas taxation regime. So what
do the Chinese do with the excess material? Turn
to the export markets.
Chinese exports of aluminium foil have been
steadily increasing over the last five years.
Exports of extrusions did rise strongly, but have
been hit hard by antidumping actions in some
countries. There are some early signs that they
are now on the rise again. Exports of flat rolled
products are more erratic, but the overall trend
is still up.
The GCC will have to compete with many
countries in the export sector, but China poses
arguably the biggest threats.
Importers are looking for two things: very
standard semis at rock bottom prices, or more
bespoke products, also at competitive prices,
but with a greater deal of customer care than is
normally expected from centres of cheap
imports.
Strategic response
Fighting China on the first point is increasingly
challenging for any semi fabricators. Using a
sweet unique selling point in the market is in
MBRs opinion the right strategy. We are seeing
this trend under way with automotive sheet
from Maaden and extrusions from Gulfex.
The GCC downstream industry has now moved
from infancy to adolescence, but how it will
reach maturity is still up for debate. Local
demand is now very well supplied, but many
states are seeking further investment. This is
arguably where the hard work starts!
Pitching the next round of investments will be
key so as not to tip the balance for the existing
operators who are already important generators
of non-oil revenues. Would too many cooks
spoil the broth? Or would they create a new
model for the rest of the world to admire?
The data and views in this article represent Metal Bulletin
Researchs outlook on the aluminium market.
For a free sample issue of Metal Bulletin Researchs
Aluminium Market Tracker, email
mbrmarketing@euromoneyplc.com quoting MBM.
Arab aluminium 2014

Downstream
Downstream
projects progress
Projects to expand the Arab aluminium industrys
capacity to process a proportion of its primary
smelter output into downstream products
continue to emerge. Andrew Hall reviews the
evolution of the sector and recent progress
Last year saw several major new downstream
projects come on stream, all of them
clustered around new aluminium smelters in
the Gulf region. These were in Oman, where
Oman Oil Companys Sohar Aluminium
Smelter spawned Takamuls Oman
Aluminium Rolling Mill (OARC) and Oman
Aluminium Processing Industries LLC (OAPIL),
and in the UAE, where Senaats Metals Cluster
complex around the Emal smelter spawned
Taweelah Aluminium Extrusion Company
(Talex) and Ducab Aluminium, both joint
ventures with Senaat.
Saudi Arabia, where Alcoa has formed a
joint venture operation with the Saudi
Arabian Mining Companys Maaden for a
very ambitious fully integrated plant with
operations from bauxite mining through to
rolled products, saw aluminium rolling come
on stream.
With the upcoming Arabal Conference
taking place in Bahrain, it is timely to
consider the development of the
downstream industries in that country, and
the rich diversity these industries have
achieved, all based around the Aluminium
Bahrain (Alba) smelter.
Alba started production in 1971 with two
potlines and a total production capacity of
120,000 tpy. The first downstream
development followed just two years later
when Bahrain Atomisers International was
established a company whose major
shareholder was the Government of Bahrain.
It was set up in Manama on a site adjacent to
the Alba smelter, taking hot metal directly
from the smelter as feedstock for an
atomisation process to produce powder
and paste.
This trend to establish downstream
operations close to the Alba smelter
continued (see timeline box). There was
similar development in Egypt, following the
start up of the countrys Egyptalum smelter

at Nag Hammadi in 1977. The difference there
was that Egyptalum was built on a site in the
middle of a desert, far away from the
industrial centres around Cairo, but close to
its source of hydro-electric power: the Aswan
dam. Other than Egyptalums own rolling
mill, opened in 1995, and its own small
extrusion plant , opened in 1999, all other
downstream development, limited to small
rolling and extrusion plants, was centred
around Cairo.
Development around another smelter in
the region, Dubai Aluminium Company
(Dubal), opened in 1979, was initially even
more sparse. The private Al-Ghurair Group
opened the company Gulf Extrusions in 1979
on a site adjacent to the Dubal smelter. This
company was later to become one of the
largest extruders in the MENA region.
The Al Jaber Group opened the company Al
Jaber Aluminium Extrusions (Ajalex) in 1994
in Abu Dhabi, and The Bin Hussein Group
opened the extrusion company Emirates
Extrusion Factory in 1995 in Ajman. Other

than these, there was essentially no further
investment in new extruders until the
development of Dubai as a holiday
destination and business centre since the
start of the new millennium, which saw a
boom in construction that brought an
estimated 30% of the worlds population of
cranes to the city and the mushrooming of
more than ten new extrusion companies in
the UAE.
FLAT ROLLED PRODUCTS

Development of the aluminium rolling
industry around the Dubal smelter was slow
to evolve. Various projects were floated from
the time of its start up, only two of which
gained some traction. The first was the Dubai
Rolling Mill Company in 2000, a project for a
40,000 tpy capacity mill based around
continuous casters, a cold rolling mill and a
foil mill, with investment by Dubai
Investments and Elval of Greece. The second
was the Aluminium Gulf Company (AluGulf)
in 2001 a project for a 25,000 tpy capacity
mill based upon a very similar format, with
planned investment or participation by the
Al-Ghurair Group and others, including
Pechiney and Clecim.
Neither projects proceeded however, due
to some extent to the success and further
development of Garmco as regional
competition, leaving the Profiles RHF
Company, established in 1998 in Sharjah, as
the only rolling company in the UAE, with a
modest capacity of 15,000 tpy.
A further project, for a rolling mill of
capacity 500,000 tpy, was announced by the
Abu Dhabi Basic Industries Corporation
(Adbic) in 2010, to be part of Adbics metals
cluster around the upcoming Emal smelter,
but since the subsequent announcement of
the Maaden Corporations plans for a rolling
mill of similar size, in partnership with Alcoa,
this project has not proceeded.
Downstream operations built near Albas smelter

1977 Bahrain Aluminium Extrusion Company (Balexco) in North Sitra Island. The first aluminium
extrusion company to go into operation in the Gulf region.
1977 Midal Cables Ltd in Manama. A company that has since developed into a major
international manufacturer of rods and cables with other manufacturing operations in
Saudi Arabia, Turkey, Mozambique and Australia.
1986 Gulf Aluminium Rolling Mill Company (Garmco) in North Sitra Island. The first aluminium
rolling company to go into operation in the Gulf region.
1993 Aluminium Wheel Company (AluWheel), set up behind Albas smelter as a subsidiary
company of Midal Cables, manufacturing aluminium wheels for automotive.
1994 Bahrain Alloys Manufacturing Company, set up next to Alba, manufacturing a range of
primary aluminium alloys, and master alloys.
garmco
Bahrains Garmco has hot, cold and foil mills. Most of the companys coil and sheet is exported
Garmcos expansion
The major rolling mill established within the
region is Garmco in Bahrain. Since its
start-up in 1986, the company has
developed operations in Bahrain to a
capacity of 165,000 tpy, and has established
a network of sales and service centres around
the world. Manufacture on a hot mill, two
cold mills and three foil mills has a market
focus on flat rolled products such as foil
stock, circles, sheet and paint stock.
About 90% of Garmcos coil and sheet
production is exported. Foil production is
primarily for sale within the GCC region,
although exports have been developed to
Europe, USA, Australia and Africa. The remelt
facility has a capacity of 80,000 tpy, for
Garmcos own internal process scrap from
their rolling and foil mills, as well as for the
processing of scrap returned from customers
operations.
With a view to securing its supply of metal,
Garmco mooted a project in 2009 for a new
remelt casthouse. The project was on hold
pending approval for the necessary supply of
gas, being one behind Albas Line 6
expansion in the queue. This approval
gained clearance early in 2014 and a project
was announced for an investment of $50
million in a new greenfield casthouse to add
a capacity of 120,000 tpy.
The new casthouse will have facilities for

the processing of mixed external scrap, and
it is Garmcos intention to increase the
proportion of scrap used in their products to
around 50%, and to develop a team
dedicated to the sourcing of external scrap.
Over the years Garmco has established
manufacturing subsidiaries, sales offices and
a network of service centres, adding value to
coil with slitting and cut-to-length facilities,
around the world. The company is now
reviewing these operations, and their new
ceo, Graham Bruce, thinks it is time to
consolidate and rationalise them in line with
the current international situation.
Of particular concern to him is the
ever-increasing threat posed by cheap Chinese
imports, and he acknowledges that their
much-improved product quality, coupled with
improved marketing and sales techniques
together with their ability to take advantage of
fluctuations within Shanghai exchange prices
for aluminium and the LMEs makes them a
real threat, which Garmco need to address.
To maintain our profitability and as part
of our continuous improvement strategy, we
have had to focus strongly on cost reduction
exercises, business process improvement
and rationalisation of our product portfolio.
At the same time we are exploring new
markets and products, Bruce said.
Oman progresses too

In Oman, the Sohar smelter is now producing
sufficient liquid metal for supply to both
OAPIL and OARC, but it currently has little
residual liquid metal capacity for supply to
other downstream industries. Takamul
expects some creep expansion in capacity,
and in this case would consider other
downstream projects which could be
economically set up with 25,000-35,000 tpy
of liquid metal, such as diecasting or
aluminium wheel production. OAPIL is
continuing its good performance with higher
sales of aluminium rods and presence in
diverse geographical markets.
The Initial Acceptance of equipment at OARC
was completed in August 2014. Stabilisation
of equipment and process has been
continuing since that time, with production
ranging from hot band to coils successfully
rolled down to a thickness of 75 micrometres.
Volumes are being ramped up and have
reached a production level of 3,500 tpm.
OARC expects to reach full capacity of
140,000 tpy in 2015. A project for an
aluminium coil coating line was started in Q1
2014 and will produce up to 25,000 tpy of
aluminium colour-coated sheets, mainly for
the construction or food markets. The
equipment will be supplied by Globus, an
Italian company.
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Arab aluminium 2014
The Saudi Arabian Mining Company

(Maaden) and Alcoa announced at a
customer event in June 2014 that the rolling
mill at their joint venture aluminium
complex in Saudi Arabia had successfully
produced its first production-grade coil. The
mill at Ras Al Khair is the most
technologically advanced in the region and
the first in the Middle East capable of
producing food grade can sheet, as well as
sheet for automotive and building and
construction applications.
The milestone marked the first productiongrade packaging coil that will be shipped to
customers for qualification. The state-of-theart mill is equipped with the latest in rolling
mill technology, including fully automated
coil and scrap transport and storage facilities,
which feature driverless guided vehicles and
cranes to optimise efficiency.
Jaguar Land Rover (JLR) have been
following developments with the Maaden
project with considerable interest and have
expressed interest in setting up an
automotive production unit in Saudi Arabia.
Their original thoughts were for a plant
adjacent to the Maaden factory. This was
later modified to the consideration of a plant
in Yanbu Al Bahr, on the Western Coast of
Saudi Arabia. This area has already been
industrialised, primarily for the oil and
petro-chemical industry. However, JLR are
monitoring progress at the Alcoa-Maaden
joint venture itself, which would be their
essential source of supply of aluminium.
EXTRUSIONS
Steady development of extrusion plants has
continued in the region, including a new
extrusion company in Kuwait, the partial
establishment of a new extrusion company
in the UAE, the upstream development of a
powder coating company in Jordan into
extrusion, and the launch of two new
extrusion companies in Saudi Arabia. It is
estimated that between 11 and 14 new
presses have been installed into the region
over the past year.
Bahrain
Bahrain Aluminium Extrusion Company
(Balexco) was established in 1977 with a 100%
shareholding by the government. This
shareholding was reduced to 45% by 1995,
then to zero when the company went public
in 1996. A new site was acquired in 1995 that
doubled the original land area. The single
extrusion press and anodising line were
transferred from the old site, and two new
presses were installed.
By 2010 the company was equipped with a
foundry, three extrusion presses, anodising
and powder coating facilities, with a total
capacity for extrusions of around 24,000 tpy.
GARMCO
Downstream
Flat-rolled products are becoming a greater proportion of the regions downstream output
A major expansion was undertaken, centring
around the installation of a new extrusion
press of 2,800 tonne force, supplied by GIA.
At the same time presses 2 and 3 were
revamped. The project was completed this
year when the original extrusion press,
installed in 1977, was revamped. Capacity has
been boosted to about 35,000 tpy and
production is primarily for architectural
applications, marketed within the GCC
region. Balexco has also commissioned a
new automated anodizing plant. For 2015,
the company plans to install a thermal break
crimping assembly machine and vertical
powder coating line.
Jordan
Unlike operations in neighbouring Syria,
extrusion operations in Jordan have stayed
stable. Three extrusion companies were
inaugurated between 1977 and 1997: Arab
Aluminium Industry in Amman; Universal
Metal Extrusion in Sahab; and National
Aluminium Factory in Jizah. The production
focus of each of them is upon the
architectural industry.
The UAEs Elite Extrusions project Jordan
Aluminium Extrusion is under construction
and production is scheduled to begin next
year.
Arabella, a trading company in aluminium
semis, with powder coating facilities, took
advantage of the closure of Emirate
Extrusions factory in Ajman, purchased their
equipment and transferred it to their new
factory in Al Mafraq. They expect to have
their new operation up and running by next
year, with two extrusion presses.
Kuwait
Three extrusion companies started up
between 1976 and 2003 Arabian Light
Metals in Ahmadi, and Kuwait Aluminium
Extrusions and Gulf Aluminium Extrusions,
both in Safat. A further extrusion company
has been built and started operations in
October this year.
Oman
The National Aluminium Products Company
(Napco) has been in operation since 1984. It
now has three extrusion presses with a total
capacity of about 21,000 tpy. An expansion
project was mooted in 2013, and was agreed
this year. The plan is for the installation of
two more extrusion presses, probably of
1,800 tonne force, with container diameter
of 178 mm, on a new site.
Qatar
Operations continue at Qatar Aluminium
Extrusion (established in 2008), while the
Abdulnoor Aluminium Extrusion Factory,
established in 2012, continues to ramp up
production.
Saudi Arabia
The extrusion industry in the Kingdom of
Saudi Arabia continues to flourish, and is
now estimated at around 240,000 tpy, of
which some 80-85% is for architectural
profiles for both domestic and industrial
structures. The Aluminium Products Company
(Alupco), established in Dammam in 1975,
with technical assistance from Alusuisse,
later acquired a second factory in Jeddah in
1983. Today the Dammam plant boasts four

Arab aluminium 2014
gulfex
Downstream
Gulf Extrusions, the first extrusion company established in the Emirates, continues to expand
extrusion presses, ranging in force from 16.5
MN to 35 MN, while the Jeddah plant boasts
five extrusion presses, ranging in force from
21 MN to 27 MN. The latest two presses were
commissioned in 2011 and 2014. Both were
manufactured by SMS, as were all presses at
the company bar one. The company has
ongoing expansions of its anodising facilities
at both its plants.
Two new extrusion companies were started
up in 2014: East Aluminium in Dammam, and
Kanaan in Jeddah.
UAE
The UAE continues to lead development in
the extrusion industry within the Arabal
region, with the most ambitious projects
stemming from Gulf Extrusions (GulfEx), the
first extrusion company to have been
established in the Emirates, in 1978. The
company has two major projects in hand.
The first is a joint venture with Senaat: Talex.
The second is with their subsidiary company
Royal Engineering Fabrication Company
(REFCo).
Talex was set up in 2010 as a greenfield
project within a concept for the most
automated and advanced plant in the
region. It was conceived in several stages.
The original plan for four separate sections in
the plant has been modified to two sections
in two phases. Phase 1 will see the
installation of a casthouse, two presses of 25
and 35 MN and the anodising plant. Phase 2
will see the installation of a third and larger
press. The installation and commissioning of
equipment in Phase 1 is scheduled for Q1
2015, with that phase in full operation by the
end of the year.
Modar Mohamed Al Mekdad, general

manager of GulfEx, describes Talex as an
elevated plant of GulfEx in terms of
technology, set up and lay out. I expect that
Talex will be a big step forward in terms of
supporting the aluminium industry in the
region, he said. It is completing the
development of GulfExs product portfolio.
The commissioning and initial running of
Talex will see the manufacture of a wide
range of products, essentially niche products
with a higher added value, not
commodities.
REFCo was commissioned in November last
year. It is the fabricating division for both
GulfEx and Talex, producing finished parts
for the automotive industry. It was the first
Mena-affiliated downstream supplier of
aluminium fabricated parts used in Tier one
automotive application, with subsequent
supply to the OEMs, including Jaguar Land
Rover, Honda and Nissan. The company is
now producing over 2 million parts a year
and is expected to grow even further,
extending supply to German and Italian car
manufacturers.
Last years Arabal Conference touched on
the subject of closing the loop of the
aluminium life cycle and noted that the
current figure for beverage can recycling
within the GCC region is 6%, compared with
the global average of 63%. Addressing this
aspect, Modar said We have a casthouse at
Talex, initially it will consume primary
aluminium as well as our internal process
scrap, but we are moving in the direction of
improved scrap recovery, including
customers recovered scrap and industrial
scrap. We are working in the same direction
as Garmco and Maaden in this respect; the

region is realising the importance of having
the right recycling facilities and I think it is
important to keep the scrap within the
boundaries of the region.
Another topic touched upon at last years
Arabal Conference was a lack of r&d facilities,
not only in the Arabal region but worldwide.
In this respect we have made some
progress, said Modar. Emal are in the
process of setting up a centre of excellence to
support the industry in the region. GulfEx
continue to work with local universities, and
we are trying to enlighten them about the
business so they can align their education
programmes to serve the markets and recent
developments in the region.
Soumya Harikumar continues his ambitious
expansion plans with Elite Extrusions. A new
2,200 tonne force press is being installed at
the groups Ras al Khaimah factory; a new
1,550 tonne press is being commissioned at
Al Hamad Industrial Company in Sharjah;
and a proposal for a third press at Nalex in
Jebel Ali is on the table.
Construction of Elites new subsidiary in
Jordan, Jordan Extrusions, continues. It is
scheduled for start- up early in 2015 with a
single press.
Elsewhere, a new extrusion plant with a
single 2,200 tonne press has been built in Al
Ain, Abu Dhabi. However, the operating
company ran into financial and contractual
difficulties, resulting in the closure of the
plant. Elite Extrusions is one of several
parties showing interest in taking this project
over.
Emirates Extrusions had to respond earlier
this year when the Ajman government
advised the company that the lease on one
of its extrusion plants would not be renewed
at the end of the year. The company decided
to concentrate their efforts on their plant in
Jebel Ali and sold the equipment from the
Ajman factory to the powder coating
company Arabella in Jordan. They
subsequently purchased a new 1,900 tonne
press from Foshan Cometal, which is
scheduled for commissioning early next year.
The purchase of a third press is currently
under consideration.
Other companies expanding their
operations in 2014 include: Al Hamad
Extrusion, which is in the process of adding a
further press of 1,550 tonnes; Arabian
Extrusion, who are in the process of extending
their operations in the old industrial zone of
Umm Al Quwain with a new plant in the new
industrial zone; and White Aluminium, which
is planning a third press.
The author is a specialist consultant on the
world aluminium downstream industry,
based in the UK.
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26 Downstream projects progress

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November 2014 | Arab aluminium | 3

Arab aluminium 2014

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Arab aluminium 2014

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November 2014 | Arab aluminium | 13

Arab aluminium 2014

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