Amid rising demand in the United States, Emirates Global Aluminium (EGA) said yesterday it is expanding its operations in America, where it has doubled its business volume over the past few years.
The move comes ahead of an expected shift in the political mood in the United States to a more protectionist stance when Donald Trump is sworn in as president next month. Mr Trump has pledged to revive American industry such as metals production at the expense of foreign manufacturers.
EGA, one of the world’s biggest aluminium producers, has opened a bigger office in St Louis in Missouri under the Dubal America name, after increasing its workforce five times since launching an office in 2014.
“St Louis has met our needs and after only a few short years, positioned us for growth,” Walid Al Attar, EGA’s chief marketing officer, said in a statement. “In order to meet growing US demand we’ve increased our workforce and doubled our business volume.”
The new premises, at 7,000 square feet, is double its previous space and will house its 25-member team “as well as provide space for future growth”, the company said. It has added nine positions in the past year at its US operations, which manages contract negotiations, sales and supply and deliveries for the aluminium manufactured at its plants in Dubai and in Abu Dhabi. EGA sells aluminium products used in US industries such as aerospace, building and construction, automotive and many other sectors.
Total US imports of aluminium rose by 8 per cent last year compared with 2014, with Canada ranking as the leading supplier, according to the US Geological Survey. Meanwhile, US smelters produced 1.59 million tonnes last year, 7 per cent less than in 2014 and 20 per cent lower than in 2011.
The fall in domestic production has prompted Mr Trump to pledge to resurrect the industry.
“We are going to put American steel and aluminium back into the backbone of our country,” Mr Trump said in a speech in January.
However, the prices of industrial metals including aluminium rallied after Mr Trump’s election win last month amid expectations of a potential increase in consumption on higher infrastructure spending under his watch.
Benchmark aluminium prices on the London Metal Exchange have risen by 16.7 per cent so far this year but are still down by about half from an all-time high of US$3,380 per tonne, reached in July 2008.
EGA, which has 300 global customers, is also expanding its operations in the UAE and in Guinea.
It is building a US$3 billion alumina refinery in the UAE, which is expected to be operational by next year and will be completed in two phases, each with an annual production capacity of 2 million tonnes.
In Guinea, EGA is building a $1bn bauxite mine, where it plans to start commercial production in 2018 and will later ramp up output to 12 million tonnes per year. The mine will be built by Guinea Alumina Corporation (GAC), an EGA subsidiary, and will supply EGA and world markets. GAC signed a 25-year mineral concession deal with Guinea in 2013, with the possibility of renewing it for another 25 years.
Bauxite is the aluminium ore processed into alumina, which in turn is processed into aluminium. Guinea has the world’s largest reserves of bauxite. EGA’s concession in Guinea contains more than 1 billion tonnes.
EGA, which was created by the merger of Dubai Aluminium and Emirates Aluminium in 2013, posted around a 50 per cent drop in net profit last year as the price of aluminium plunged amid a supply glut.
EGA is owned equally by the Abu Dhabi government-owned Mubadala Development and Investment Corporation of Dubai. The company has a production capacity of 2.4 million tonnes of aluminium per year.
dalsaadi@thenational.ae
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Dust storm
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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