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INTRODUCTION06 A complete cycleIn tough global markets, the Arab aluminium industry is leveraging its capabilities in low-cost, high-quality, production and building capacity to serve the full aluminium cycle

GLOBAL MARKET ANALYSIS08 Finding advantageGlobal market dynamics and low aluminium prices are impacting all producers to a degree. Achieving competitive advantage is key in such times

SMELTER FACT-FILES10 The key smelter dataFact-files for each of the region’s established smelters illustrate the main investments in the expansion of primary production. Capacities, products and markets show the industry’s local and international importance

PROJECT FOCUS19 Ma’aden–Alcoa jv’s full integrationThe Ma’aden–Alcoa aluminium complex has now become fully integrated from mining bauxite, refining, smelting, casting and rolling to recycling

TECHNOLOGY20 Technology showcaseThe Arab aluminium industry has long been a showcase for state-of-the-art technology investment. Here we give several recent examples

DOWNSTREAM22 Downstream developmentsRolling and extrusion capacities continue to climb in the Arab aluminium region, reflecting local and international demand and market opportunities

November 2015 | Arab aluminium | 3

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AL TAISEER

SOHAR ALUMINIUM EGA

MA’ADEN-ALCOA

www.albasmelter.com

Arab aluminium 2015

Introduction

6 | Arab aluminium | November 2015

Ask any metal analyst about the current state of the world primary aluminium market and they will point to a disappointingly low base price for the metal and the dramatic fall in regional premiums over the past year. In a word, there is overcapacity in production at a global level and it is weighing heavily on prices.

A glance at WBMS statistics illustrates the extent to which production is growing: up by 7.2% year-on-year during the first eight months of 2015. Production growth in Asia climbed by 12.7% over the same period, much of which came from increased production in China.

While consensus is universal that the prospects for continued long-term growth in demand for aluminium remain good – given further opportunities for the light metal in aerospace, automotive and rail transportation – there is similar unanimity that production is running ahead of demand.

When Metal Bulletin Magazine consulted half-a-dozen leading analysts about factors impinging on aluminium markets and prices for its September 2015 issue special feature on aluminium, a variety of market drivers came to the fore.

Chief amongst them was the influence of China, as it now accounts for over half the world’s primary aluminium production. Further, by some estimates the nation is on track to have added an additional 5 million tpy of capacity by the end of 2015. Exports of aluminium from China during the first seven months of this year were up by 28% year-on-year, at 2.87 million tonnes, according to China Customs data.

While curtailment of some high-cost production at smelters outside China has helped to offset such burgeoning growth and

A complete cycleAs in years past, Metal Bulletin’s annual Arab Aluminium Supplement covers the past 12 months of developments for the region’s industry – from upstream raw material supply to downstream extrusion and rolled products. Beyond the region’s well established primary supply, our 2015 edition also touches on nascent growth in recycling aluminium. Against a background of tough global markets, the area’s supply chain is advancing to complete the full aluminium cycle

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partly reduce the imbalance in the supply-demand scales, some believe that only sustained low local prices for aluminium in China are likely to encourage production cuts there. Devaluation of the yuan in China has actually helped to make the country’s aluminium exports even more competitive.

As one analyst observed, “Pretty much every primary aluminium producer outside the USA has seen its costs falling,” which makes the likelihood of further production cuts outside China low. Another, however, pointed to the widespread fall in regional premiums, down by about three-quarters since a year ago, putting sufficient extra pressure on some smelters ex-China to actually make some further curtailments outside the country more likely.

As Metal Bulletin reported from MB’s 30th International Aluminium Conference in September, the 25% drop in LME aluminium base prices over the past year means that a large portion of producers are ‘under water’. Although that does not apply to Arab aluminium smelters, some conference participants also pointed out that low aluminium prices do not encourage further new investment in growth even for low-cost producers in the Middle East.

Arab aluminiumMore detailed analysis of global dynamics in aluminium markets is given in the article which follows this introduction. Arab aluminium primary metal producers are not immune from such global headwinds, but their advantage in occupying places at the bottom end of the global cost curve remains a key one. And while the LME aluminium price remains a benchmark of interest to everyone in the international supply chain – from bauxite miners to aluminium end-users and scrap merchants – significant regional and even national variations in market fortunes cannot be ignored.

As the Fact-file section and Downstream article in this supplement illustrate, growth in the region’s production has increased in the past year, albeit it at a more modest rate than the boom period of a few years ago.

UpstreamSecuring commensurate growth in bauxite and alumina supplies has been part of the recent Arab aluminium industry story. Most recently, the start-up of the 4 million tpy bauxite mine in Saudi Arabia, operational since the second quarter of 2014, has been an important step for the Ma’aden-Alcoa joint venture in Saudi Arabia. The first alumina from the integrated project’s refinery was produced in the final quarter of last year and it is due to produce over 1 million tonnes during 2015.

For its part, Emirates Global Aluminium owns Guinea Alumina Corporation – a strategic bauxite mining and alumina refinery development project in Guinea, West Africa, and it is developing the UAE’s first alumina refinery in Al Taweelah, Abu Dhabi.

SmeltingIn June this year, Aluminium Bahrain (Alba) announced approvals for its US$3.5 billion Line 6 Expansion project, which is due to boost the company’s production capacity by 514,000 tpy to about 1.45 million tpy. Production is expected to begin in early 2019.

In November last year, Sohar Aluminium in Oman completed its first pot change-out programme by relining all of the 360 pots in its 375,000 tpy, 1.2 km long, single-potline primary smelter.

Ma’aden-Alcoa’s smelter is on track to produce its full nameplate capacity of 740,000 tonnes of aluminium in 2015.

DownstreamWhile the proportion of primary aluminium output delivered from each of the Middle East’s smelters to downstream local industries varies, the principle of providing support to local industries is a common one.

The integrated Ma’aden-Alcoa joint venture has its own rolling mills to feed. It is increasing its production of value-added products, and its large used beverage can (UBC) recycling facility is an example of the importance that the region is now attaching to supplies of secondary aluminium as well as primary.

Established flat product rolling mill Garmco, in Bahrain, is proceeding with a new remelt casthouse to make use of both internally generated and externally sourced scrap. A contract to build the new casthouse was signed with Fives in September this year (see the technology article in this supplement).

Meanwhile, the Arab aluminium region’s existing extensive capabilities for extrusion production continue to grow (see downstream article in this supplement). For example, new projects and plant expansions can be found in Jordan, Oman and the UAE.

OutlookIn summary, the usual interplay between global macroeconomic, geopolitical and local factors will determine the pace at which the aluminium industry develops in the Arab world.

While in simple terms of primary aluminium production figures the Arab aluminium region’s output will continue to be dwarfed by China’s, its low cost base,

strategic geographical location and expanding capability to supply high-quality value-added aluminium alloys, semis and products, will ensure its continued international influence.

As Alba ceo Tim Murray told Metal Bulletin in May this year: “We’re a low-cost producer. So we have large gains in profitability when prices are high and survive when the price is low.” He added that if costs were to rise and put the company in the second quartile, “then perhaps some level of hedging might be considered from a risk-management perspective.” Alba is expanding in both its international and domestic markets. It produced more than 930,000 tonnes of aluminium in 2014 and sells about half of its production into the Bahraini market.

And as Metal Bulletin also reported, in the context of low-cost primary aluminium production, Alcoa ceo Klaus Kleinfeld has said that if he had a portfolio of Saudi smelters (like Ma’aden) he would “sleep extremely well”. Kleinfeld has an international perspective. Alcoa has reshaped its global business, leading to the recently announced upstream and downstream split of the company into two. It has closed, sold or curtailed 1.4 million tpy of higher-cost capacity while reshaping since 2007.

PRIMARY ALUMINIUM PRODUCTION*

2014 2014 2015 Jan-Aug Jan-AugEurope 7,684.4 5,095.2 5,039.4Africa 1,749.0 1,182.0 1,112.0 Egypt 304.8 207.4 218.0Asia 35,591.9 23,673.6 26,684.2 Bahrain 931.4 624.5 636.9 Oman 363.5 240.2 249.6 Qatar 640.2 408.6 405.4 Saudi Arabia 665.0 443.3 444.0 UAE 2,296.0 1,511.3 1,662.1Americas 6,111.0 4,139.9 3,870.4Oceania 2,031.0 1,371.1 1,312.2Total 53,167.4 35,461.8 38,018.3

PRIMARY ALUMINIUM CONSUMPTION*

2014 2014 2015 Jan-Aug Jan-AugEurope 8,037.7 5,367.8 5,136.2Africa 817.7 545.6 584.0 Egypt 233.0 156.5 192.1Asia 36,700.0 24,598.3 27,058.2 Bahrain 450.0 300.0 300.0 Saudi Arabia 150.0 100.0 100.0 UAE 835.0 556.6 556.6Americas 7,353.8 4,859.5 4,938.9Oceania 379.4 253.0 175.3Total† 53,821.5 35,980.3 38,271.6*’000 tonnes. †adjusted total includes estimated unrecorded demand. Source: WBMS

Arab aluminium 2015

Global market analysis


The world of aluminium has seen a dramatic shift in the past year and while we flagged up many of these building pressures last year, few really believed that change would come through so quickly and decisively. Here we discuss the drivers of the collapse in aluminium premiums and the reshaping of the producer landscape. Progress is coming through thick and fast and producers in the Middle East need to stay nimble to keep up with these ever evolving market dynamics.

At the time of the previous Arabal conference, in late November 2014, aluminium premiums had gone through the roof, with quotes in the US above US$500/t, Japan at US$420/t and Singapore at US$325/t. By mid-October 2015 these had all collapsed, having fallen by 70%, 77% and 75% respectively, as the LME changed its rules on warehouse queues in response to pressure from consumers and regulators. Long gone are the days when the industry could rely on

high premiums as a cushion against weak fundamentals and low LME prices.

All-in aluminium prices (LME price plus premium) give a much better guide to underlying industry pressures. With LME prices also down by 25% in the past year this has added to the pain for high-cost

producers. Taking all this into account the all-in-price in the US, for example, is down by 33% in the past year.

While prices are much lower, however you look at it, production continues to expand both globally and in the Middle East. There are two key reasons for this counterintuitive behaviour. First, aluminium continues to operate in its own universe on the demand front, with rapid gains in market share helping to fuel consumption growth. This is not a short-term price-driven effect, but a long-term structural change and sets it apart from markets like copper, steel and other base metals.

For example, in the automotive sector aluminium continues to gain market share at the expense of heavier materials such as iron and steel and there is significant upside potential for automotive body sheet in particular. Also aluminium is more focused on consumer-driven sectors such as aerospace, where growth remains strong both globally and in China. Finally, aluminium has been making inroads in the wire and cable market. The Middle East has helped lead the way on this and Saudi Arabia has made significant progress in replacing copper with aluminium in some areas of power transmission.

The second reason for this expansion in smelter production is that foreign exchange trends have meant that producers in many key producing regions have been insulated from lower LME prices. Brazil and Russia have seen their currencies tumble by over 30% from a year ago (as of mid-October), as traders continue to worry about weak growth and the state of many emerging markets. Canada has also seen the Canadian dollar drop by 13% from a year ago. These big currency moves have helped these major producing countries.

Finding advantage

Aluminium producers are having to respond to a competitive landscape that is as tough for smelters as ever. Dan Smith reviews the global market dynamics of the past year, the present position and outlook, together with implications for the Middle East aluminium industry

Aluminium price v. LME stocks3,500

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500

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Stocks, (Tonnes, RHS) Cash price, (US$/tonne, LHS)

Ali stock image to come


So where are the main areas of growth for aluminium producers and are further cutbacks looming? Globally, growth in smelter production is still very fast and has accelerated in the past year. The latest data from the International Aluminium Institute (IAI) show that growth was running at a red-hot 10% year-on-year in the first nine months of 2015, compared with growth of 4% in 2014 and 5% in 2013. China is still booming as part of its “Go-West” strategy and output has risen 18% year-on-year so far this year. India is also a part of the growth story and the IAI data show that Asia (ex-China) recorded an expansion of 23% year-on-year in the year to September, admittedly from a much lower base.

By contrast, cutbacks in smelter production are coming through only slowly, which is helping to slow the global growth rate, although not in a meaningful way. Producers like Alcoa and Century have been responding to lower prices and closing high-cost capacity. Partly as a result of these closures, output in both North and South America is trending down. In the nine months to September 2015 these two regions saw smelter production fall by 2% and 16% year-on-year, respectively. Africa has also seen modest falls in production recently. Producers in North America have benefitted from much lower energy prices, but with a strong US dollar encouraging imports, the competitive environment is still a tough one and many producers are struggling.

So what about the GCC region and the Middle East itself? Here it appears that the boom that developed after the 2008/2009 recession is over for now. While production almost doubled between 2010 and 2014 (with the GCC rising from 2.7 million to 4.8 million tonnes), growth this year has slowed to a modest 7%.

Looking ahead, producers in the Middle East will probably have to be more strategic about growth and will need to carefully consider their own competitiveness, as well as the global supply-demand balance. The crackdown on LME warehouse queues mentioned above has certainly been severe and rules are getting stricter. One side-effect of this though is that it makes it very difficult for producers to assess the underlying supply-demand balance in the aluminium market and to determine whether the market is in surplus or deficit.

What is clear is that LME stocks have tumbled in the past year. Stocks have fallen from 4.3 million tonnes at the time of the 2014 Arabal event in November 2014 to 3.1 million tonnes in mid-October 2015. As we warned last year, the LME market has turned from a net buyer to a net seller and these

outflows look set to continue for the time being. The general consensus amongst the industry is that some of these outflows have been diverted into the physical market for consumption, although probably a large chunk has been shifted into warehouses outside the LME reporting system.

Financing dealsAnecdotally, the appetite for financing aluminium inventory by banks appears to have diminished, after the scandal at Qingdao saw several high-profile banks exposed to warehouse collateral fraud by other parties, which was uncovered in May 2014. Needless to say banking regulators are also pursuing potential conflicts of interests aggressively, which has encouraged banks like Goldman Sachs and JP Morgan to sell warehousing operations. Financing of inventory has been around for many years and will always be part of the commodities industry, but with reputations potentially at risk, many banks are exiting that business. While banks have been selling operations, other firms such as traders have stepped in to plug some of the gaps.

Tracking the shape of the LME forward curve tells us whether the incentive is still there for others to pursue the cash-and-carry trade. While interest rates remain so low, steep contango markets can still look appealing to any trader who can secure cheap storage space. We can see from the chart though that the contango in aluminium from cash to 15-months has fallen from a peak of US$228/t (11% yield) in October 2008 into backwardation in November 2014, before the contango widened to US$73/t (5% yield) in September. This shows that many financing deals have become marginal from an economic perspective, as yields have been compressed.

Once financing activity has been removed, it seems that the aluminium market is still oversupplied and Western producers will still probably need to remove more capacity to cope with rampant supply growth in China and to help reduce bloated inventory levels.

In terms of competitiveness, producers in the Middle East still have significant cost advantages over large swathes of the industry, even though a strong US dollar has mitigated the inherent advantage of low-cost local energy supplies. High-cost smelters can still be found in Australia, Brazil, India, Russia and Venezuela, and Europe has a number of countries which have some that are struggling (including Germany, Norway, Netherlands and Spain). China is also relatively high cost, although this means little when smelters do not respond to price incentives and can carry on producing for years to support employment levels and local government revenues.

The local energy mix also favours smelters in the Middle East as a source of clean smelter production, and this is a potential source of competitive advantage, as environmental controls get stricter and climate change rises up the political agenda. In the GCC region, gas accounts for virtually all of the energy used by smelters, whereas producers in Australia and China rely heavily on higher-emission energy sources such as coal. Producers in Europe and North America, by contrast, heavily favour hydro-electric power, which may be clean operationally, but can be vulnerable to abnormal weather patterns.

In the past year the aluminium market has continued to evolve in response to regulation, market pressures and strong demand. The steps taken by the LME have helped to bring down warehouse queues and premiums back to more normal levels. While demand has expanded rapidly, prices have remained depressed as the industry remains plagued by overcapacity and excess inventory partly due to the financial crisis of 2008/2009. Reforms have removed some distortions from the market, but the competitive landscape for aluminium smelters remains as tough as ever.

The author is a Chartered Financial Analyst and ceo of Dan Smith Commodities Research Ltd

Trend in LME contango14%

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Arab aluminium 2015

Smelter fact-files


Locations> Bauxite mine at Al Ba’itha, 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 Ma’aden’s 77 sq km minerals industry complex

Initial capacities> 4 million tpy bauxite mine, in operation

since the second quarter of 2014> 1.8 million tpy alumina refinery. The first

alumina was produced in Q4 2014. 1 million tonnes is to be produced in 2015

> 740,000 tpy aluminium smelter. First hot metal was produced in December 2012. Now fully operational. It is expected to produce the full 740,000 tonnes of aluminium in 2015.

> 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 produced its first auto coil in Q4 2014. Construction of the rolling mill is complete and its production is currently ramping up. The mill complex also has a large UBC recycling facility

Ownership> Ma’aden, the Saudi Arabian Mining Co

(74.9%)> Alcoa (25.1%, with a right to increase its

share to 40%)

Investment> 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

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, Ma’aden and Alcoa signed a financing agreement for $1 billion, in addition to $1 billion loan approval from Saudi Arabia’s 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. Hot and cold rolling mills from SMS Siemag

> Coating line from Germany’s BWG Bergwerkund Walzwerk-Maschinenbau

> Preheat furnaces from Ebner

Raw materials> Bauxite feedstock for the alumina refinery

is transported by rail from the new mine at Al Ba’itha. Alcoa has been supplying alumina to the smelter from its Bunbury port facility in Western Australia during the refinery’s start up phase

Products and markets> 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.

Key smelter dataArab 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

ALCO

AMA’ADEN-ALCOA JV, KSA

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Smelter fact-files

Arab aluminium 2015


EGA

EGA

Introduction> Emirates Global Aluminium (EGA) has two

primary aluminium smelter assets: Dubai Aluminium (Dubal, also known as Jebel Ali Operations) and Emirates Aluminium (Emal, also known as Al Taweelah Operations). The UAE-based business also owns Guinea Alumina Corporation (GAC), a strategic bauxite mining and alumina refinery development project in Guinea, West Africa; and is developing the UAE’s first alumina refinery in Al Taweelah, Abu Dhabi

Products and markets> EGA supplies more than 350 customers in

almost 70 countries. The product mix in 2015 comprised billet for construction, industrial, transportation and automotive industries (46%); re-melt products, comprising foundry alloys for automotive applications (27%) and high-purity aluminium for electronics and aerospace purposes (15%); and sheet ingot for packaging, lithographic sheets and the automotive industry (12%). The company’s major markets (2014 figures) are Asia (44%); countries in the Middle East and North Africa region (21%); Europe (23%); and the Americas (12%)

Owners> EGA is jointly held in equal ownership by

Mubadala Development Company and Investment Corporation of Dubai

Staff> About 6,886 (as of September 2015), of

whom 17% are UAE Nationals.

EMIRATES GLOBAL ALUMINIUM (EGA), UAE

Dubal Emal (Jebel Ali Operations) (Al Taweelah Operations)Location & development Site area 4.8 sq km 6 sq kmConstruction schedule Built in multiple sequential phases Built in two phasesFirst cell energized October 1979 December 2009Last cell energized February 2008 June 2014

Reduction No. of cells 1,573 1,200No. of potlines 7 3Hot metal production capacity 1,035,000 metric tpy 1,320,000 metric tpyTechnologies D18; D18+; CD20; D20; DX; DX+ Ultra DX; DX+

Casting Total casting capacity > 1,200,000 tpy > 1,600,000 tpySow 52,500 tpy 330,000 tpyStandard ingots 245,000 tpy 570,000 tpyProperzi ingots 98,500 tpy –Horizontal direct casting 86,000 tpy –Vertical direct casting 704,000 tpy 330,000 tpySheet ingot – 370,000 tpy

Power generation Generation capacity 2,350 MW 3,100 MWGas turbines 23 9Steam turbines 7 4

Seawater desalination Technology Multi-stage evaporation Reverse osmosisCapacity 30 million gallons/day 3.75 million gallons/day

Carbon Greenmill capacity 72 tph 1.08 million tpyBaked anodes 380,000/year 700,000/year

EGA

Smelter fact-files


Capacity/production> Over 931,000 metric tonnes per year of

primary aluminium production

Location> Kingdom of Bahrain – 10 km from the

smelter’s own marine terminal for imports of alumina, petroleum coke and pitch

Raw materials> Purchased on long-term contracts from

several international suppliers. Alba imports over 1.6 million tpy of alumina in shipments of up to 60,000 tonnes from suppliers in Australia and Asia

Owners> 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 Investment Company (20.62%); General Public (10%)

Staff> About 3,000, of whom 87% are Bahraini

nationals

Finance> Alba shares have been listed on the

Bahrain Bourse as well as the London Stock Exchange since December 2010

Schedule> 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 2014, Alba received approvals for the natural gas allocation for its Line 6 expansion project

> In June 2015, Alba announced approvals for the Line 6 Expansion Project. Expected to begin production in early 2019, this Project will boost Alba’s per-annum production by 514,000 metric tonnes upon full ramp-up bringing the total production capacity to approximately 1,450,000 metric tonnes per year

> The Capex associated with this Project will be approximately US$3.5 billion versus the prior estimate of US$2.5 billion. Included in it is the construction of a fifth power station with a capacity of 1,350 MW

> The Line 6 potline will utilize Dubal’s DX+ Technology

> J.P. Morgan, Gulf International Bank (GIB) and National Bank of Bahrain (NBB) were announced as Financial Advisors for the Line 6 Expansion Project on June 10, 2015

> In August 2015, Alba received the environmental permission for its Line 6 Expansion Project from the Supreme Council for Environment, Kingdom of Bahrain

Major equipment> 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

Products and markets> Alba produces extrusion ingot as cut-to-

length 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 2014: extrusion billet (40%); liquid metal (30%); rolling slab (13%); foundry alloys (14%); ingot (3%). Bahrain has the biggest downstream sector amongst the GCC countries. Almost half of Alba’s output is supplied to downstream industries in Bahrain, as liquid metal, billet and slab

> Sales in 2014: Bahrain (49%); Other MENA (18%); Asia (13%); Europe (15%); America (5%).

ALUMINIUM BAHRAIN BSC (Alba)

ALBA

Capacity/production> 320,000 tpy

Location> Nag Hammady HQ. Smelter 100 km north of

Luxor

Finance> 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

with 320,000 tpy capacity. Plans to expand capacity to 400,000 tpy

Major equipment> Operates 12 potrooms

Products and markets> 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

> Fabricators and international markets. Exports from the port in Alexandria. Markets include Europe, the USA, the Arab Gulf, Turkey, North Africa, Africa and Asia.

EGYPTIAN ALUMINIUM (Egyptalum)

Proposed site for Line 6 Expansion Project, which is expected to boost Alba’s annual production by 514,000 tonnes


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Arab aluminium 2015

Smelter fact-files


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

with a 1.2 km long single potline comprising 360 pots

Location> Sohar, Oman

Staff> 73% of Sohar Aluminium’s workforce of 1,000

individuals are Omani nationals

Raw materials> Alumina for the plant is imported from Rio

Tinto Alcan’s refineries

Owners> 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%).

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 June 2014

> In November 2014 Sohar Aluminium completed its first Pot Change-out programme by relining all its 360 pots

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 AP39 technology running at more than 380 kA

Products and markets> 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

> Additionally Sohar Aluminium also exports small volumes to UAE downstream projects

> Sohar Aluminium’s long-term plan is to use around 60% of the smelter’s aluminium production for local companies and to export the balance. Oman Aluminium Processing Industries Ltd (OAPIL) is one of the smelter’s downstream customers

> 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

> Oman’s 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).

Capacity/production> Design capacity of 585,000 tpy of primary

aluminium> Current production level of 612,000 tpy of

primary aluminium (2014)

Location> Mesaieed Industrial City outside Doha

Raw materials> 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 1.2-1.5 million tpy, but no decision to expand has been made

Major equipment> Twin 1.2 kilometre-long potlines, a carbon

plant, port and storage facilities, and a captive power plant

> The smelter uses Hydro’s enhanced HAL300 technology, running at above 300 kA, and the dedicated 1,350 MW power plant, built for Qatalum by General Electric and Doosan Heavy Industries & Construction, includes four gas turbines and two steam turbines operating in a combined cycle

> Qatalum’s casthouse has a capacity of around 640,000 tpy to accommodate alloying and scrap recycling

Products and markets> Main products are extrusion ingots and

foundry alloys for a global customer base in

the global transport, building and consumer goods industries. Metal is mainly being shipped to the Asian and North American markets. Hydro will also retain the option of selling more metal into Qatalum’s domestic market longer term. The Qatar Investment Authority is encouraging private investment in downstream industries that will take metal from the smelter.

SOHAR ALUMINIUM, OMAN

QATAR ALUMINIUM (Qatalum)

SOH

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Arab aluminium 2015

Project focus


Having completed construction, the Ma’aden-Alcoa integrated aluminium joint venture complex in Saudi Arabia is now operating as a fully integrated aluminium facility from mine to rolling mill and all points in between, supplying high-quality primary and rolled-product solutions to customers in both domestic and international markets.

It has achieved several milestones in the past year or so, says a spokeswoman for Alcoa Inc., the minority partner in the facility. Perhaps most notably it produced its first alumina from Saudi bauxite in December 2014 and is expected to produce a total of 1.1 million tonnes of alumina from its refinery this year.

Now fully in ramp up mode, this project, a joint venture of the Saudi Arabian Mining Co. (Ma’aden) and Alcoa is expected to not only become the world’s largest integrated aluminium facility, but the lowest cost aluminium producer in the Middle East.

“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,” Ma’aden’s president and chief executive officer, Khalid Mudaifer, said in a press release.

Ma’aden has the majority ownership in 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.

A spokeswoman for Alcoa, which currently has a 25.1% share of the project, but has an option to eventually increase that holding to 40%, says it is a good platform for growth for the US-based aluminium producer, which is committed to align its capabilities with those of Ma’aden to meet the Saudi Kingdom’s

development goal of adding minerals and metals as the third pillar of its economy, alongside hydrocarbons and petrochemicals. “To support the development of this third pillar presents opportunities for Alcoa to participate in future growth initiatives within the Kingdom,” she says, adding: “Our focus continues to be on health and safety, operational excellence and the sustainable transfer of knowledge and expertise from Alcoa to Ma’aden to ensure its long-term success.”

Alcoa recently announced its intention to divide itself into two separate public companies – one centred on the upstream and the other targeting downstream metal applications. In this regard, Alcoa would only say: “For now, it’s business as usual and we’ll continue to operate as one integrated company until the separation is complete.”

Ma’aden’s aluminium smelter, which produced its first hot metal in December 2012 and began commercial production at the beginning of September 2014, is now fully operational. It is on track to produce its full nameplate capacity of 740,000 tonnes in 2015.

The ramp up of its bauxite mine, its alumina refinery and its rolling mill is reportedly progressing on schedule.

In a move that Ma’aden describes as “the commencement of the final link in the supply chain of this fully integrated aluminium facility,” on 21 December 2014 the joint venture’s refinery in Ras Al Khair produced its first alumina using bauxite from the project’s bauxite mine 600 km away in Al Ba’itha – the first of its kind in the Middle East.

The refinery is expected to produce 1.1 million tonnes of alumina in 2015 and 1.8 million tonnes once fully ramped up. During the refinery’s startup phase Alcoa had been supplying alumina to the project’s smelter, which is also in Ras Al Khair, from its Bunbury port facility in Western Australia.

The Ma’aden rolling mill produced its first production grade hot rolled can sheet coil in June 2014 and its first automotive grade coil in the fourth quarter of last year and continues to ramp up to its full rated capacity. Mudaifer called this feat “a big step forward” as the Ma’aden rolling mill is the first aluminium rolling facility in the Middle East capable of producing food-grade can sheet, as well as sheet for automotive and construction applications.

Its 100,000 tpy expansion, which included a cold mill, a heat treating line and a finishing line, has enabled the mill to produce auto-grade sheet as it incorporates the latest in rolling mill technology, including fully automated coil and scrap transport and storage facilities. From the start, it was the intention of Ma’aden’s partners to have the rolling mill serve the foil stock, construction and automotive industries in addition to producing body-, end- and tab-stock for cans. Much of the auto sheet produced there is expected to be exported to the US, Europe and China.

The Ma’aden complex also includes a UBC recycling facility capable of processing billions of cans per year. Ma’aden’s partners say that they are hopeful that this facility will be the first step in developing a new recycling industry in Saudi Arabia.

Alcoa says that it sees its participation in the Ma’aden project as an integral part of its strategy to lower its overall production cost base and to capitalize on growth opportunities in the Middle East. “By establishing a strong footprint in the growing Middle East region, it positions Alcoa to capture new market opportunities,” the spokeswoman explains. “In addition the Ma’aden-Alcoa joint venture will help to further lower Alcoa’s overall cost base as it takes its highest cost smelting capacity offline and shifts production to lower cost facilities,” she says, adding, “The complex will utilize critical infrastructure, including low-cost and clean power generation, as well as port and rail facilities developed by the Saudi Kingdom’s government.”

Ma’aden –Alcoajv’s full integrationWith construction now complete, the Ma’aden-Alcoa integrated aluminium joint venture complex in Saudi Arabia is operating as a fully integrated aluminium facility, reports Myra Pinkham

MA’

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The refinery is set to produce over 1 million tonnes of alumina this year

Arab aluminium 2015

Technology


From mining, refining, smelting and casting, to rolling, extruding and processing, the Middle East’s aluminium industry has deployed a wide range of state-of-the-art technology during its decades of growth.

While smelting companies themselves have done much to develop and enhance their own electrolytic cell technology, international plantmakers such as SMS Group, Danieli and Primetals have contributed through their supply of a range of technologies, including rolling, extruding and processing lines. Other specialist equipment makers and engineering companies have provided a wealth of the latest hardware and software to support Arab aluminium producers’ low-cost, but high-quality, production.

The trend continues today. Here we outline several examples of recent technology investments by Arab aluminium companies: power supply upgrades by ABB for Alba and Dubal, and an order from Garmco for a new re-melt and casting facility from Fives.

Garmco and Fives to launch re-melt expansion project As part of Garmco’s expansion, Fives has been awarded an EPC contract for construction of a new re-melt & casting facility in Bahrain.

Garmco’s Bahrain-based international aluminium rolling mill is one of the largest downstream aluminium facilities in the Middle East. This project includes the building of a new cast house to enable the

company to develop its metal recycling capability and lower the cost of producing cast aluminium slabs for rolling.

As the Engineering, Procurement & Construction (EPC) contractor, Fives will be fully responsible for the timely and successful execution of the contract. The company says that it will use its experience in process integration, project management and execution, combined with its in-house multi-discipline engineering expertise. Over the past 15 years, the company has completed several lump-sum turnkey contracts in the Middle East, while supplying more than 50 furnaces since 2003, including integrated cast house solutions.

The re-melt facility capacity will be 120,000 metric tpy of cast slab product to stringent requirements for metal and casting quality,

Technology showcaseSome recent examples of state-of-the-art technology deployment

RELIABLE ABB POWER SUPPLIES FOR INCREASED PRODUCTIONDependable and efficient power supplies are key to increasing aluminium production. Alba (Bahrain Aluminium) and Dubal Aluminium in Dubai (part of Emirates Global Aluminium) have both turned to ABB to provide key electrical installations to support their projects to expand capacity at their smelters.

Busbar upgrades were provided for potlines 5, 6, 7 and 9 for Dubal as part of a contract completed in May this year, 16 months after it was awarded in January 2014. The current is 275 kA for potlines 5&6, and 280 kA for 7&9.

Potline 5 received a rectifier cooling upgrade and, together with potline 6, saw transformer replacement. A cooling upgrade study was completed for potline 9.

ABB fibre-optic current sensors were installed for all four potlines and an Eagle booster rectiformer (RT 3) was replaced and upgraded to 40 kA.

The overall scope of supply included the design, manufacture, delivery to site, erection, testing, commissioning and completion of all the equipment and technologies required.

In August this year, Alba awarded ABB an engineering, procurement and construction (EPC) contract for the turnkey supply of an additional (R37) rectiformer for potline 3. The work also includes the supply and construction of an additional rectiformer bay and associated metering and control equipment for operation at 1,530 VDC at 30 kA.

Other elements include extension of the existing low-voltage distribution system and the supply of 11 kV feeder cables. The new equipment is scheduled to start operating in February 2017.

Dubai Aluminium, UAE (left), and Bahrain Aluminium (right) have installed new electrical equipmentABB ABB


Driving progress

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A5_187x120mm_Metal Bulletin_Arabal2015.indd 1 16/10/2015 13:25:19

for a varied production campaign of alloys and slab sizes.

Fives says that it will use the latest 3D engineering tools and project management techniques to ensure the smooth execution of the project.

The plant will be located on Garmco’s existing land, but is a complete new build incorporating utility and power infrastructures, a purpose-built cast house building and all civil works. Challenging ground conditions at the job site, with a very high water table, will need special measures in the civil engineering designs to ensure that the completed civil works remains impervious to water.

Sustainable productionOne of the aims of the project is to produce cast slabs in a sustainable way. This will be achieved by incorporating a twin-chamber melting furnace capable of melting contaminated scrap from external sources. The ability to recycle scrap metal into useful liquid metal will optimise the operating costs for Garmco.

About half of the plant metal throughput could be provided by recycling aluminium

this way. Associated with the twin-chamber furnace will be a chip feeding and submerging system that will process aluminium chips from the downstream processes on the plant and distribute them into the furnace. Automated circulation and metal transfer systems will also be provided. The twin-chamber furnace will also have an air pollution control system to manage the furnace emissions to the project requirements.

Liquid metal from the twin-chamber furnace will feed two tilting melter/holder furnaces where the metal will be further refined and mixed to create the necessary alloy mix ahead of casting.

The tilting furnaces will be capable of delivering the metal flow at the required tolerances of the casting machine. Two purpose-designed charging machines will tend to all the charging requirements of the furnaces.

The project will have a ‘zero chlorine’ policy in the new plant and so the relevant technologies for metal treatment, including fluxing, degassing and filtering equipment have been incorporated. The configuration of this equipment will be organised to achieve

the specific metal qualities necessary for ensuring good cast products and eventually high-quality aluminium coils. One slab casting machine capable of casting metal to the required finished quality and tolerances will be supplied.

Eventually the project will be a standalone facility and will be capable of maintaining operations independently. All the associated equipment to do this will be supplied, such as a casting water cooling system with evaporative cooling towers and a specific water treatment system, a casting machine mould maintenance shop, process cranes and material handling systems, operational tools, all process and motor controls employing a unique configuration devised for this cast house, one fire protection system, one plant CCTV system, plant offices and access roads.

One overall control, communication and data capturing system will be supplied to enable the operators to monitor equipment operation remotely and transfer production data to Garmco’s existing plant-wide data handling system. Fives will also assist Garmco with the on-site management of a new band saw installation which is also incorporated into the overall design of the casthouse.

www.fivesgroup.com

Arab aluminium 2015

Downstream


The Arabal Conferences were inaugurated in Kuwait in 1983 by Kuwait Industries and Mohammed Al-Naki, focusing on aluminium smelters in the Middle East, with a passing nod towards downstream developments in the region.

From this time onwards, the event was organised bi-annually in Bahrain, Dubai, Egypt or Kuwait, with a couple of events stretching into the following year due to regional wars. At the 14th Arabal event in 2010, held in Luxor, Egypt, it was announced that due to the increase in the number of smelters in the participating region the event would be held annually.

This year’s Arabal Conference takes place in Saudi Arabia, the first time the event has

been held in the country, which is home to the Ma’aden-Alcoa integrated aluminium joint venture, in which Alcoa currently has a 25.1% share and Ma’aden, the Saudi Arabian Mining Company, holds the balance.

While smelting remains centre stage, over the years the region’s downstream sector has steadily grown in importance.

Ma’aden–Alcoa jv progressesThe project initially began as a joint venture agreement between Ma’aden and Rio Tinto Alcan for a world class fully-integrated aluminium complex, signed by the two companies in April 2007. However, by December 2008, in the wake of the global financial crisis, Rio Tinto Alcan pulled out of

the project. A year later, Alcoa agreed to become a joint venture partner with Ma’aden.

The Ma’aden-Alcoa project began with the construction of an aluminium smelter and rolling mill at Ras Al Khair, on the eastern coast of Saudi Arabia, with production at the smelter starting on schedule on 12/12/2012. It comprised two potlines, each of 360 pots, using AP37 technology, with a combined capacity of 740,000 tpy.

After the successful initial start-up, Potline 1 closed temporarily in October 2013 due to “instability problems”, reopening a few months later. The upstream facilities were integrated by completing a rail link from the bauxite mine to the alumina refinery, a distance of some 600 km, and the commissioning of the refinery in Q4 2014. Bauxite mine capacity is 4 million tpy and alumina refinery capacity is 1.8 million tpy.

Ma’aden’s casthouse contains 15 furnaces, producing standard ingot, T-bar, sheet ingot and billet, with a total production capacity of 740,000 tpy.

The hot rolling line has a 1+4 configuration, with a reversing roughing mill and 4-stand tandem finishing mill, each of 2,300 mm barrel width. The line had an initial capacity of 380,000 tpy.

The cold rolling line comprises a 4-stand tandem cold mill, with a single-stand cold mill on the automotive line, both with barrel width of 2,300 mm and coil width of 2,100 mm max. Initial capacity of the line was 390,000 tpy. All rolling mills were manufactured by SMS Siemag.

The rolling plant is one of the most technologically advanced in the world, with

Downstream developmentsProjects to expand the Arab aluminium region’s capacity to produce rolled products and extrusions continue to progress. Andrew Hall reviews recent advances in the region’s downstream aluminium industry and notes a growing interest in recycling

ALCO

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A section of the finishing line at the Ma’aden – Alcoa joint venture in Saudia Arabia


production focused on can stock, automotive body sheet and products for the building and construction industry. First production-grade coil was produced on 24 June, 2014, and qualification for can stock was achieved with various customers by December last year.

The line producing automotive body sheet (ABS) is one of the smaller facilities by world rankings, comprising a CHT furnace and finishing equipment mainly supplied by the SMS group. Initial line capacity is 50,000 tpy, and it is presently in its final commissioning phase.

The complex also has a recycling plant, mainly focused on UBC scrap, and equipped with shredders, delacquering, a sidewell furnace and a rotary furnace. Production capacity is 120,000 tpy – more than sufficient to recycle every UBC supplied in the Gulf region.

Production of can stock is ramping up, based upon the development of demand. Supply of can stock was initially targeted at the local markets - the Gulf region of the GCC countries - but it is Ma’aden’s clear intention to develop export markets in order to take full advantage of their very low cost base.

For Alcoa, this project’s focus is to take advantage of the fully-integrated supply chain, the bauxite mine through to the rolling mill and its finishing lines. Within this aim is a need to ensure a sustainable transfer of aluminium-manufacturing knowledge from Alcoa to Ma’aden to ensure the long-term success of the project. This has happened successfully so far, and Alcoa sees the joint venture as a key part of their low-cost strategy in the upstream business,

which is one of their lowest within their global operations.

As the project to manufacture ABS unfurled, Jaguar Land Rover entered the discussions, with JLR mooting ideas for a manufacturing plant in Saudi Arabia, possibly on a site adjacent to Ma’aden’s ABS line. JLR signed a letter of intent in December 2012 to build a factory expected to produce about 50,000 cars a year.

Later plans for the plant saw it sited at King Abdullah Economic City, on Saudi Arabia’s western coastline, instead. However, on 3

September 2015 the Financial Times reported that JLR had dropped its plan. In response to the FT’s request for comment, JLR said that the Saudi project was now “on hold”, but the newspaper added that several people familiar with the matter said the plans had been called off.

However, JLR has shown interest in the supply of ABS from Ma’aden to its other manufacturing plants, and there have been past reports elsewhere that major American car manufacturers could be interested in building their own manufacturing plants in Saudi Arabia.

Garmco invests The major established rolling mill within the region is Garmco in Bahrain. Since its start up in 1986, the company has developed operations in Bahrain to reach a capacity of 165,000 tpy, and has established a network of sales and service centres around the world.

Production 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 coil and sheet production is exported. Foil production is primarily for sale within the GCC region, although exports to Europe, USA, Australia and Africa have been developed. The remelt facility has a capacity of 80,000 tpy, for Garmco’s own internal ‘clean’ scrap from their rolling and foil mills, as well as for the processing of customer-returned scrap.

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,

TOP GCC DOWNSTREAM EXTRUSION COMPANIES WITH CAPACITIES*

Country Companies Total no. of companies in country Capacity (metric tpy)Bahrain Bahrain Aluminium Extrusion Co. 1 36,500Jordan Arab Aluminium Industry Co. 6 20,000 National Aluminium Industrial Co. 12,000 Al-Bayan Aluminium Company 11,500 Arabella Aluminium Extrusion Company 9,500 Others 7,600Kuwait Arabian Light Metals 4 15,000 Al Misbah Al Kuwaitia for Aluminium Extrusion 11,000 Gulf Aluminium Extrusions Company 10,000 Kuwait Aluminium Extrusion Co. 7,000Oman National Aluminium Products Co. (Napco) 1 26,000Qatar Qatar Aluminium Extrusion Co. 2 9,000 Abdulnoor Aluminium Extrusion Factory 4,000Saudi Arabia Aluminium Products C. (Alupco) 16 77,500 Al Taiseer Aluminium Company 58,000 Al Twaijiri Aluminium Extrusion Co. 24,500 Aluminium International Co. (Alinco) 18,000 Others 94,500UAE Elite Extrusion Company 15 57,500 Gulf Extrusions (GulfEx) 55,000 Al Jaber Aluminium Extrusions 35,500 Arabian Extrusion Factory 31,000 Others 133,000

*Lists largest four companies in each country by name Source: Alken

Ma’aden-Alcoa’s integrated complex: refinery alumina conveyor connecting to the alumina silo, with the smelter in the foreground, and the cast house and rolling mill in the background

ALCO

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Arab aluminium 2015

Downstream


pending approval for the necessary supply of gas, until early in 2014 when a project was announced for an investment of $50 million in a new greenfield casthouse to add a capacity of 120,000 tpy.

The development will be in two phases. Phase 1 started in early July 2015 with the objective to increase capabilities with regard to recycling and opportunities to source scrap or cheaper materials on a global basis. This centred on the construction of a scrap storage area and segregation unit, which is being managed internally by Garmco, with the support of a local supplier.

For Phase 2, the contract for the construction of the new casthouse was signed with the French industrial engineering group Fives on 29 September 2015, with the objective to increase slab casting capability, which has long been one of Garmco’s bottlenecks. Work on Phase 2 is scheduled to begin in January 2016. The whole project is set to run for about 21 months, starting in September 2015.

Garmco’s intention is to develop a raw material flow for the casthouse comprising three streams of roughly equal proportions: primary metal, their own internal scrap, and third-party external scrap – the last stream comprising class I or class III materials from canmakers, UBC scrap and closed-loop scrap generated by Garmco’s own customers.

Jean-Baptiste Lucas, ceo of Garmco, explained: “We are not aggressively pursuing closed-loop scrap buyback contracts with our customers just now due to our present

lack of capacity. But there are good opportunities here. Also, we have some large trading houses in the Gulf, who are keen on increasing their value-added scrap trading and in offering pre-segregated scrap, so we work with traders as well as our customers.”

Over 2015-16, Garmco is also investing in upgrading the automation and the programmable logic controllers (PLCs) of their two cold mills. Work on cold mill 2 was completed earlier in 2015. Cold mill 1 will be upgraded next year, with the work being undertaken by Primetals.

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 has reviewed these operations, and a rationalisation of them in line with the current international situation is 70% completed.

“We are still finishing some liquidation processes and are phasing out of a few markets,” said Lucas. “We have ceased operations at our Shanghai service centre and have liquidated the company there. Work on closing our South Korean operation should be completed by the end of the year. So basically we intend to focus on a much leaner setup: our Far East hub, centred in Singapore, with Thailand and Suzhou; our Australian hub in Melbourne; and our US hub in Louisville.”

Like Graham Bruce, Garmco’s former ceo, Lucas is concerned about the level of Chinese exports. “This is still very much an issue,” he says. “We are still suffering very much from a

lot of material which is basically being dumped in our markets. The business rationale behind these mills is not very clear – why they are adding capacity and what is their ultimate target for these operations?”

In discussing Ma’aden, Lucas says Garmco is not really in competition with the Saudi rolling mill because much of their output is can stock. “We wish them well and talk to them from time to time on subjects of common interest. They are producing ingots and slabs, so even with our new remelt, when our requirement for third-party slab will drastically decrease, we will still buy ingot, so they are a potential supplier.”

EXTRUSIONSBahrainBahrain Aluminium Extrusion Co. (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 remelt and billet casting facility, three extrusion presses and powder coating facilities, with a total capacity for extrusions of around 24,000 tpy. A new automatic anodising line was supplied by the Italian company Monti in 2011. The remelt facility was mothballed in 2012.

A major expansion was undertaken in 2011, centring around the installation of a new 28 MN extrusion press line supplied by GIA. The other three presses were revamped and the project was completed in 2015. Capacity has been boosted to about 33,000 tpy and production is primarily for architectural and industrial applications, in mill finish, powder coated and anodised, marketed in the GCC region, where Saudi Arabia and Kuwait are major export regions.

Amongst the range of fabricated systems are the Balexco 45, 60 and 100 architectural systems, as well as the Balexco Luxury System – sliding systems designed for excellent noise and heat insulation, as well as wind and rain resistance.

For the future, Balexco is studying the feasibility of refurbishing and restarting its remelt and billet casting plant, as well as the installation of new plant and equipment for increasing powder coating capacity. Balexco is also aware of increasing competition within their markets, and has developed strategies to effectively deal with these and remain a market leader in the extrusion industry in the Middle East.

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A GIA 28 MN direct extrusion press at Balexco in Bahrain

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Arab aluminium 2015

Downstream


JordanOngoing war in the Middle East has largely centred around Syria and Iraq. Jordan has been relatively stable over the last year, but with its northern borders bounding both of these countries it has been affected in other ways. The war has caused a massive influx of refugees, estimated at well over one million, with many of them being accommodated in the Zataari and similar camps. This has generated a demand for building sections, but only for simple white profiles of limited length and very low price. Another effect of the war has been to bring trade and commerce with the north to a virtual standstill, affecting exports and projects that are reliant upon the import of equipment.

The four extrusion companies operating at the beginning of the year – Arab Aluminium Industry in Amman, Geminal Extrusion in Amman, National Aluminium Factory in Jizah and Universal Metal Extrusion in Sahab – have continued production at a modest level, focused upon the architectural industry in general, and upon supply to the Zataari camp in particular. One new company started up last year, Al-Bayan Aluminium company, on a site close to the Amman International airport. It has installed two extrusion presses and is supplying architectural extrusions.

The UAE’s Elite Extrusion’s project Jordan Aluminium Extrusion was scheduled to begin

operations this year. However, the problems mentioned above have meant that little progress has been made. They are now planning to move an extrusion press from their factory in Ras al Khaimah in October, and production is now 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.

This project was also delayed, but the two extrusion presses were finally commissioned in September and the company is ramping up production. It has previous experience with the trading and powder coating of industrial sections.

General manager Khaled Abudhaim remarked: “While there are opportunities of supply to the refugee camps in the north, this is not our target. We will supply the local market for the first year, then direct our marketing efforts towards the engineering industry, where we can get a better margin. Next year we will look towards exporting to such areas as Palestine and Kurdistan, in the north of Iraq. Of course, when there is a solution to the Syrian crisis and peace comes, Syria will be rich in opportunities for rebuilding – but who knows when that will be?”

KuwaitLast year saw the start-up of a new extrusion company, Al Misbah Al Kuwaitia for Aluminium Extrusions & Industries – the fourth in the country. The Al Misbah Group was established in 1980 and has developed with companies in the construction, glass, real estate, automotive and tourism industries. Al Kuwaitia was established in 1997, trading in aluminium profiles. Operations in powder coating and anodising were developed, and in 2014 an extrusion press was installed, equipped with Chinese presses of 5in and 7in billet container diameter, and two powder coating lines.

OmanThe only extrusion company operating in Oman, the National Aluminium Products Company (Napco), has been in operation since 1984, and at present has two extrusion presses with a total capacity of about 18,000 tpy.

An expansion project was mooted in 2013, and was agreed in 2014. This ambitious project involves the installation of two further extrusion presses, each supplied by the Spanish company Tecalex, of 1,800 MT force, two more powder coating lines (one horizontal and one vertical), one anodizing line, and two wood finish lines, while the fabricating section will be bolstered with the addition of bending and thermal crimping facilities.

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Flash anodising & powder coating line at Al Taiseer in Saudi Arabia

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Arab aluminium 2015

Downstream


The civil phase of construction on a 15,000 sq metre plot adjacent to the existing site was completed in June 2015, extending the company’s operating area to 65,000 sq metres. Installation of the equipment is expected by the end of 2015, with production starting in Q1 2016. Production capacity will be almost doubled.

Napco’s present production, mainly of architectural and industrial sections, is 65% exported, principally to the UAE, Qatar and Saudi Arabia, and the company is a licensee of Hydro Aluminium’s Wicona System for Oman.

Marketing manager Danny Holtkamp commented: “ Currently we are running at full capacity and sometimes have to, albeit regretfully, turn our customers away because of it. More and more projects are coming up in the region so, with our new expansion in place, we will be well placed to meet the demand.”

QatarOperations continue at Qatar Aluminium Extrusion (established in 2008), while the Abdulnoor Aluminium Extrusion Factory, established in 2012, continues to ramp up production.

Saudi ArabiaWithin the Kingdom of Saudi Arabia the major project over the past year has been at Al Taiseer Company with the installation of two new front-loading presses of 25/27 MN,

supplied by SMS Meer, with induction furnaces for the 8in billets supplied by IAS and feed line and handling system supplied by Omav.

The first of these presses is under commissioning and commissioning of the second press will start in November, with production from both presses expected at the beginning of next year. This brings the total number of presses at the company’s plant in Riyadh to six, all from SMS, boosting their capacity to around 60,000 tpy.

The finishing section has been boosted with the recent start-up of a new flash anodising and powder coating line. The vertical line anodises at 4 to 6 µm and powder coats in a range of colours. The system has been performance tested for 5,096 hours of salt spray at the IFO in Germany and Al Taiseer provide a 35 year performance guarantee.

The system is supported by four vertical and two horizontal powder coating lines, which are designed and approved for Qualicoat certification, and a German anodising line for lengths up to 7.5 metres in silver, medium to dark bronze, black, champagne and gold finishes. All are approved by Qualanod.

UAEThe Al Ghurair group’s Gulf Extrusions (GulfEx) has two major projects in hand. The first is a joint venture with Senaat: the Taweelah Aluminium Extrusion Company (Talex). The second is subsidiary company

Royal Engineering Fabrication Company (REFCo).

Gulfex themselves are developing new products, notably a fire-rated door, capable of holding a fire for up to 90 minutes. “Since most 90 minute fire-rated doors used in the building and construction industry are made of steel, one made of aluminium is quite an innovation,” said Modar Mohamed Al Mekdad, general manager of Gulf Extrusions.

Talex has started commissioning the casthouse. The commissioning of the extrusion presses is expected by the end of October, and Modar expects to have the casthouse and the two presses in operation by the end of this year.

Previous delays of about six months were due to the fact that this is the first downstream project in Kizad (Khalifa Industrial Zone Abu Dhabi) on the ‘hot metal road’, and there were unanticipated waiting periods for approvals and government permits. The hot metal road itself is now in operation, liquid metal transportation should be ready early next year. The Talex casthouse can take hot metal, ingot or internal scrap streams as raw material.

Refco is continuing to grow and should complete this year with around 21% sales growth year-on-year, and Modar expects the same growth rate next year. Production is entirely for automotive and Refco is already supplying OEMs in the UK, France, Germany, Italy, China and Mexico.

A 50/50 jv between the Al Ghurair group and a Qatar business group for a surface treatment plant in Qatar will be operational by the end of this year. The Al Ghurair group have also completed technical and market studies on a single-press extrusion plant in Ethiopia, with a decision on its implementation dependent upon the financing options available to them.

Modar’s interest in the development of centres of excellence in the region continues. “We had some interesting discussions this year, which we are continuing, to set up such a centre as a partnership between the primary sector, government, universities and the private sector. I believe many companies are working in new areas of research and development, so it will be a logical step for them to become involved in such a project. But I think it would be quite some time before this is materialised,” he said.

Royal United Metal and Glass, a metal engineering firm in Dubai dealing in aluminium, stainless steel and glass for the fabrication of composite and steel cladding, canopies, hand rails, decorated features, furniture and frames, is installing a 2,500 MT extrusion press from SMS Meer, extruding 229 mm billet. Production is due to start at the end of 2016.

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Al Taiseer has invested in a major expansion programme

Arab aluminium 2015

Downstream


Emirates Extrusion Factory have announced plans to install their third extrusion press in 2016, together with a new powder coating plant. The company is planning 10% growth over the next three years with increased exports into the MENA region, as well as serving the ongoing strong demand in the UAE.

RECYCLING “I think there is an excellent opportunity to enhance this [recycling] business now that aluminium premiums have dropped,” said Gulfex’s Modar.

“Last year and in the first half of this year the premiums went sky high, so the demand for extrusion scrap was high and most of our scrap was exported outside of the region. So I believe the current premium level will not encourage the dealers or traders, which will make the scrap in the region quite available,” he noted.

“We should take advantage of this situation to develop further scrap recycling in this region so that people can see the benefits. So far the Gulf Aluminium Council (GAC) have completed a study about scrap in the GCC countries and the numbers were really surprising: circa half a million tonnes per year. I believe this will be the first step in further actions to be considered by local governments in the GCC countries to limit the export of scrap to outside the region, which will encourage the governments to make directives that will stop such exports. Our scrap recycling capacity is 35,000 tpy, so we

need less than 10% of the available scrap, which I’m sure we will be able to fulfil,” he said.

“The percentage of internal scrap recycling in the GCC is very high, and there is a very high demand for scrap. Most of the scrap that is recycled is done within the producing companies. There are very few companies tolling scrap. In terms of UBC recycling the situation in the Gulf is not like that in Germany, America or even Australia, where there are very well established UBC collection systems. Those collecting UBC in the GCC are mainly the Indian expats, who will go along

and dig them out of trash cans and refuse dumps. It is actually quite efficient because you don’t really see many UBCs left, but it’s not exactly a systematic approach,” says Balexco’s executive plant manager Garry Martin. The official figure for the recycling of UBCs in the GCC is 6%, which is very low by world standards.

Garmco’s ceo Jean-Baptiste Lucas says that he is a bit sceptical about these numbers because they are based upon official collection rates which he says are very difficult to define in this part of the world because there is a lot of very informal, difficult-to-track collection.

“If you walk the streets in Bahrain or Riyadh you will find a lot of people collecting cans and scrap and selling this to recycling companies or trading houses. There is a lot of this kind of informal collecting, which is by design hard to track and hard to quantify. There are a lot of cash transactions, which to some extent exist in other parts of the world.

“So my first comment is that the actual recycling is much higher than the official number. My second comment is that we will witness a trend towards education and awareness among the general population which has not happened yet in this part of the world as it has in Europe or the USA. In the last 20 years the recycling rate has significantly increased through awareness campaigns, which have yet to be implemented in this part of the world. But once we get them the recycling rate will increase because there is intrinsic value in recycling material, even in rich economies.”

The author is a specialist consultant on the world aluminium downstream industry, based in the UK.G

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Taweelah Aluminium Extrusion Company (Talex) (images above and below) is a new extrusion project in the UAE

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www.chalieco.com.cn

www.sohar-aluminium.com

· 2015. 12. 9. · sales e-mail: [email protected] us sales tel: +1 212 224 3570 asia...

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