Emirates Global Aluminium, the UAE’s biggest industrial conglomerate outside the country’s oil and gas sector, signed a three-year agreement to supply China’s Bosai Minerals Group with bauxite ore from Guinea.
EGA will supply the group with several million tonnes of bauxite ore each year, with the first shipment expected in January, the company said in a statement on Thursday. The value of the deal was not disclosed.
The company, which produces about 2.7 million tonnes of aluminium every year, supplied Bosai Minerals Group with more than one million tonnes of bauxite this year under short-term agreements, according to the statement.
“EGA is now a major player in the merchant bauxite market,” Abdulnasser Bin Kalban, chief executive of EGA, said.
Bauxite is the ore from which aluminium is derived.
EGA, which is jointly owned by Abu Dhabi’s strategic investment arm Mubadala Investment Company and the Investment Corporation of Dubai, is the world’s biggest “premium” aluminium producer and the company’s metal is the largest made-in-the-UAE export after oil and gas.
The company has smelters in Abu Dhabi and Dubai, and a bauxite mine in Guinea. With aluminium prices at their highest levels since 2011, EGA generated a record income of Dh1.74 billion ($473 million) in the first half of the year, after a loss of $57m a year earlier. Core earnings were $950m.
A commodity boom has boosted the prices of products such as steel, copper and aluminium. Strong prices for aluminium, a high percentage of value-added products and record production at the company’s Al Taweelah alumina refinery and its Guinea Alumina Corporation, underpinned the return to profitability.
Aluminium prices are forecast to increase 6 per cent in 2022 on strong demand and supply concerns after a projected jump of 50 per cent this year, but will ease going forward as energy constraints dissipate, the World Bank said in its latest Commodity Markets Outlook report.
EGA’s bauxite mining subsidiary Guinea Alumina Corporation made the company the second-biggest supplier in the world last year of bauxite ore to third-party customers, according to the statement. GAC began production in 2019.
“We welcome EGA as a long-term supplier of bauxite to Bosai Group and look forward to the reliable supply of Guinean ore over the years ahead to drive our business,” Yuan Zhilun, chairman of Bosai Minerals Group, said.
EGA invested around $1.4bn in the development of GAC, one of the largest greenfield investments in Guinea in the past 40 years, the statement said.
GAC operates a 690-square-kilometre mining concession, located in the north-west of Guinea. Once mined, bauxite is transported to GAC’s port at Kamsar by train using shared rail infrastructure.
EGA operates a transshipment facility in Guinea, enabling its bauxite to be shipped using giant Capesize vessels, lowering shipment costs per tonne, according to the statement.
The company is developing its own technology to decarbonise its operations and reduce emissions, Salman Abdulla, executive vice president of HSSEQ (health, safety, sustainability, environment and quality) at EGA, said at the Global Manufacturing and Industrialisation Summit in Dubai last month.
EGA aims to lower its emissions further in the next 10 to 15 years through “breakthrough technologies”, even as green sources of energy including hydrogen and solar become available for power generation, Mr Abdulla said.