A new Dh440 million aluminium plant in Abu Dhabi will create more than 200 manufacturing jobs as the emirate seeks to diversify its economy.
Emirates Aluminium Rolling (Emiroll), a joint venture with Dubal Holding, Dubai Investments and the Singapore-based industrial group Mars, will build an aluminium rolling plant in the Khalifa Industrial Zone Abu Dhabi (Kizad).
Khalid bin Kalban, managing director and chief executive of Dubai Investments, said that the Dh440 million investment would be a boost for the manufacturing sector.
The UAE aims to reduce the proportion of GDP that comes from energy revenues from about 30 per cent to 20 per cent over the next 10 to 15 years by increasing the services and industry sectors. The government wants the manufacturing sector to make up a quarter of the UAE’s total GDP by 2025 – more than double the current figure of 11 per cent.
“Dubai Investments already has a strong portfolio in the manufacturing sector, and the launch of Emiroll will further diversify its product base, particularly in the construction materials and related industries,” said Mr bin Kalban.
By late next year, the plant is expected to manufacture 65,000 tonnes of aluminium coils annually for applications in downstream industries, such as automotive body parts, roller-shutters, garage castings, container trays, cans and aerosols. This addition to the market will add about 200 new jobs while also bringing in additional indirect opportunities as the demand for flat-rolled aluminium products continues to grow.
The UAE produces more than half of the GCC’s 4.5 million tonnes of primary aluminium annually, but only 10 per cent of that goes towards downstream applications. And according to Anoop Fernandes, a senior analyst at Bahrain-based Securities & Investment, there is a gap in the regional market.
He said only Saudi Arabian Mining Company (Ma’aden) has the capabilities to produce high-value downstream aluminium products, although its rolling mill is in the ramp-up stage.
“The GCC is a large market for downstream aluminium products – especially in segments related to construction and packaging,” said Mr Fernandes. “The market for aluminium cans is large and the requirement of aluminium sheets that go into can manufacture is met entirely through imports.”
The new facility will help to meet rising demand globally, expected to grow at an average of 6.5 per cent annually. Mars will use 30 per cent of the product while the remainder will be supplied for domestic, regional and European consumption.
The move into downstream manufacturing comes as global aluminium prices come under pressure from overcapacity.
Mr Fernandes said that downstream products accrue premiums of several hundred dollars over the London Metals Exchange (LME) price, which is widely used for metals trading. The move to increase downstream offerings is likely to add value to the upstream unit.
“With the cost curve flattening due to a decline in the cost of energy, aluminium prices are likely to remain subdued,” he said. “Hence downstream products help aluminium producers make more dollars per tonne of aluminium sold.”
Aluminium prices fell 18 per cent last year, sinking to six-year lows, with the LME’s three-month contract falling to US$1,432 a tonne in November. The new venture hopes to tap emerging demand across the region.
“Emiroll aims to capitalise on the unmatched market demand for aluminium in downstream industries across the Middle East and is expected to play a major role in this direction,” said Mr bin Kalban.
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