Emirates Global Aluminium (EGA), one of the world’s biggest aluminium producers, said on Tuesday its 2016 net profit rose more than 10 per cent thanks to record production and cost cuts.
Net profit rose to Dh2.1 billion from Dh1.9bn a year earlier, the company said.
Production rose 4.2 per cent to 2.5 million tonnes in 2016, from 2.4 million tonnes in 2015. EGA said that a higher proportion of its production (82 per cent, compared to 77 per cent a year earlier) was used to create value-added products.
It said that a focus on “cost management and operational efficiencies” had contributed to stronger profit margins.
Earnings before interest, tax, depreciation and amortisation (ebitda) was flat at Dh5bn last year compared with 2015, despite revenue declining by nearly 9 per cent to Dh17.1bn compared to Dh18.7bn in 2015.
“The hard work of EGA’s employees delivered strong financial performance in 2016 despite challenging conditions in the global aluminium market,” said Abdulla Kalban, the CEO.
“I am pleased with the progress we have made in 2016 in strengthening EGA’s position in the industry and contributing further to the industrial diversification of the UAE.”
The company said that it had made “significant construction progress” on plans for a new US$3bn alumina refinery at Al Taweelah in Abu Dhabi, but did not say when this was likely to complete. It was originally due for handover by the end of this year, but this date has been subsequently pushed back to early 2018. The refinery will have a capacity to produce 2 million tonnes of smelter-grade alumina per year.
One of its achievements in 2016 had been to deliver hot metal directly from its smelter at Al Taweelah to the nearby Khalifa Industrial Zone (Kizad), which is facilitating a drive to create a bigger downstream aluminium sector and add more value to products made here.
EGA said the “notable growth in volume” of aluminium provided directly to local customers – which increased by 16 per cent to 262,000 tonnes (or just over 10 per cent of the total) – was evidence of this downstream sector development. The remainder of its product was shipped to about 300 customers in 60 countries.
It also earned royalty fees for the first time by licensing proprietary smelting technology to Aluminium Bahrain.
EGA was created in 2013 through a merger between Abu-Dhabi’s Emal and Dubai’s Dubal. It is jointly owned by Abu Dhabi investment company Mubadala and the Investment Corporation of Dubai, the emirate’s sovereign wealth fund.
In June last year, EGA’s board approved construction of a new 12 million tonne per annum bauxite mine in Guinea that will feed its smelters once it opens in 2020.
Through EGA, the UAE is now the world’s fourth-biggest producer of aluminium and, according to the International Aluminium Institute, the GCC is the second-biggest aluminium producing region in the world, although in terms of actual volumes it is dwarfed by China.
In January, 447,000 tonnes of aluminium were produced in the region out of a total global figure of 5.27 million tonnes. China produced about 56 per cent of this, or 2.95 million tonnes.
Aluminium prices dropped by almost 50 per cent between mid-2014 and the end of 2015, from just over $2,110 per tonne to US$1,423 per tonne, according to the London Metal Exchange data. However, they slowly recovered over the course of 2016 and were given a boost in January when the Chinese government proposed capacity cuts. This has taken current prices to over $1,900 per tonne, but BMI Research has predicted that prices will average about $1,700 per tonne during 2017, which it said could be a “volatile” year.
mfahy@thenational.ae
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