Emirates Global Aluminium, the UAE’s biggest industrial company outside the oil and gas sector, delivered a strong 2020 performance despite one of the most challenging years for the industry due to Covid-19 disruptions.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) climbed to Dh4.1 billion ($1.13bn) at the end of last year, a 63 per cent rise from 2019, it said in a statement on Tuesday.
A strong ramp up of EGA’s alumina refinery and bauxite mine in Guinea, West Africa, cost controls and lower global prices for raw materials helped to improve the company's earnings.
"I personally believe this is the most challenging year for the industry in decades. Covid-19 and measures to control it led to [the] slowdown and even shutdown of manufacturing plants around the globe during the first half of the year. For the aluminium market, the effect was significant," Abdulnasser Bin Kalban, chief executive of EGA, told The National.
"Despite [the] challenging environment, EGA did remarkably well ... our financial performance improved significantly."
A ramp-up in new upstream projects and a more positive sentiment for the global aluminium market carried over to this year means "we have a very strong outlook for 2021", he said.
"The recovery of the global aluminium market that began in the second half of 2020 has continued into 2021," he said. "We expect benchmark aluminium prices to remain around $2,000 for 2021 as a whole."
Aluminium prices slumped to about $1,400 per tonne in April last year from a previous peak of over $2,500 per tonne. They are currently hovering at the $2,200 per tonne level.
Lower prices last year meant EGA's revenue took a hit, declining by 9 per cent to Dh18.7bn and demand for value-added products fell. The firm's smelting margin rose, however, to 23 per cent in 2020, from 14 per cent a year earlier.
EGA, which is jointly owned by Abu Dhabi’s strategic investment arm, Mubadala Investment Company, and the Investment Corporation of Dubai, said its cash flow from operating activities improved by 35 per cent to Dh5.5bn.
The company, which has more than 400 long-term customers in 50 countries, sold 2.52 million tonnes of cast metal, down slightly from 2.6 million tonnes in 2019.
Despite pandemic-driven headwinds, value-added or "premium aluminium" products accounted for 72 per cent of total sales.
"If you factor [in] that EGA is not integrated [into] downstream [products] unlike many other players, this is actually an outstanding performance, and a testament to the strength of our relationship with our customers," EGA's chief financial officer Zouhir Regragui said.
It sold 252,000 tonnes of products to UAE customers, accounting for about 10 per cent of total sales. EGA's Al Taweelah alumina refinery produced 1.92 million tonnes of alumina, close to its capacity of 2 million tonnes.
Guinea Alumina Corporation, which operates the company's bauxite mine, exported 9.56 million tonnes of bauxite ore, making EGA the second-largest third-party seller of bauxite in the world in its first full production year.
Mr Bin Kalban said that EGA has yet to hear anything regarding the re-instatement of a 10 per cent tariff by the Biden administration on aluminium imports from the UAE. The administration said in February that it intended to re-instate the tariff that former president Donald Trump removed just before leaving office in January.
"It is a government-to-government issue," he said.
EGA made its position clear even before tariffs were imposed that "our aluminium is an important part of the US primary aluminium supply", Mr Bin Kalban said.
"We support 5,600 direct jobs in the US and 25,000 indirect jobs."