Dubai Cable Company (Ducab), the second-largest cable manufacturer in the Middle East, is building its first aluminium plant as customers in Saudi Arabia to the US seek cheaper alternatives to copper for power transmission.
The $60 million factory in Abu Dhabi in the UAE will have capacity to produce 50,000 metric tons of aluminium rod and overhead conductors annually, Andrew Shaw, managing director of Dubai Cable, said in an interview on Monday at the company’s copper rod plant in Dubai.
The project, called Ducab Aluminium Company, will create 120 to 140 jobs with its opening planned for the first quarter of 2016, he said.
Copper is losing about 2 per cent a year of demand to less costly materials such as aluminium, or about 500,000 tons, London-based researcher CRU estimates. Aluminium is about 30 per cent cheaper than copper and supplies in warehouses monitored by the London Metal Exchange are 12 times larger.
“Given the relative economics of copper versus aluminium, particularly in Saudi Arabia, they’ve tended to chose aluminium,” Mr Shaw said. “We see a slow substitution of copper for aluminium, particularly in a country like Saudi which is a very large market.”
Dubai Cable, started in 1979, is mostly a copper buyer, purchasing about 135,000 tons of the metal a year, with about 70,000 to 80,000 tons used to make cables. Last year, it bought 8,000 tons of aluminium. Riyadh Cables Group is the biggest cable producer in the Middle East, according to Mr Shaw.
The UAE’s Emirates Global Aluminium will provide all the hot molten metal needed for Ducab Aluminum at the Khalifa Industrial Zone in Abu Dhabi, Mr Shaw said. “From a logistics and an industrial operating efficiency point of view, this is great. They’re like the mother hen, fostering a downstream industry.”
Ducab Aluminium is 60 per cent owned by Dubai Cable, and the rest by Senaat, which owns Abu Dhabi companies including National Petroleum Construction and Emirates Steel. Dubai Cable itself is owned 50 per cent by Senaat and the other half by Investment Corporation of Dubai, which oversees the government’s commercial assets.
Follow The National's Business section on Twitter