Abu Dhabi's EGA on track for 2018 initial public offering

The UAE’s biggest industrial company outside the oil and gas sector is pressing ahead to finish its $3.3bn alumina refinery

EGA, earlier in the week received its first shipment of bauxite from Guinea. Courtesy Mubadala

The initial public offering of Emirates Global Aluminium, the UAE’s biggest industrial company outside the oil and gas sector, is on track for the second half of this year, as the company presses ahead to finish its $3.3 billion Al Taweelah alumina refinery project in Abu Dhabi, its chief executive said.

“We have decided to go for [the] IPO in 2018. We will let you know how much, where [later],” Abdulla Kalban, told a media briefing on Tuesday, without giving further details. The deal will depend on the market conditions, he said.

In February, Khaldoon Al Mubarak, chief executive of Mubadala Investment Company and EGA’s chairman said 2018 would be the year EGA goes to the market. The company is among the regional state-controlled entities planning a share float as IPOs make a comeback after a lull in the past two years.

The UAE markets, which along with their GCC peers lagged a global equities rally last year, have already seen two big-ticket deals -- the listing of Emaar Development in Dubai and Adnoc’s float of its fuel and retail business on the Abu Dhabi Securities Exchange in 2017. As the economy recovers from a three-year oil slump, more IPOs, from both the private and public sector, are expected to hit the market.

EGA’s IPO plans come at a challenging time for global aluminium industry, in the wake of US President Donald Trump’s decision to target steel and aluminium imports with tariffs of 25 and 10 per cent, respectively.

Mr Kalban, however, said EGA remains committed to the US market and will continue serving its customers there.

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“It’s a good market and we have been there since 1998," he said. "We have a very good customer base in the US and I think we will continue supplying our customers.”

EGA, exported about half a million tonnes of aluminium to the US in 2017. It is the third-biggest exporter to the country after China and Russia.

Talks between the UAE government and the US administration on tariff issues are “progressing well”, Mr Kalban said, without giving further details.

Despite potential headwinds, the company is pursuing its growth agenda, expanding operations in the UAE and abroad with an aim to secure all segments of the value chain, from a $1.4bn bauxite mine in Guinea to its Al Taweelah alumina refinery.

The alumina refinery is the first to be built in the UAE, and only the second in the region after Maaden’s production facilities in Saudi Arabia. It will refine bauxite ore into alumina, the feedstock for aluminium smelters. EGA currently imports all the alumina it uses in aluminium production.

The company, which reported a 59 per cent increase in 2017 net profit, said the overall refinery project has reached 82 per cent completion and construction on the calcination process facility is complete. The project, which is being funded from EGA’s own balance sheet, is expected to come on stream in 2019.

Once full ramp up is achieved, Al Taweelah is expected to produce about 2 million tonnes of alumina per year, meeting 40 per cent of EGA’s alumina requirements for its two smelters in Abu Dhabi and Dubai.

EGA has already begun pre-feasibility study for phase two of the refinery project which, if built, will double the capacity to 4 million tonnes.

“We are looking at different technology and equipment. Hopefully, phase two would be much more efficient [and will be] built faster,” he said, adding that the cost for the next phase has yet to be determined.