Reality and Prospects of Aluminum Industry in the Emirate of Abu Dhabi

Economic Studies Section

transport and communications. to develop their industrial sectors and economies. the "Economic Vision 2030" views metal industries. Moreover. while the second part focuses on the REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 2 . followed by the establishment of Dubai Aluminium Company Limited "Dubal" in 1975. Therefore. Abu Dhabi maintains great potential for growth. due to being a capital-intensive industry that consume a great deal of energy. as the aluminium industry forms the basis for a spectrum of locally. and the Gulf States became in a position to be among the largest producers of aluminum in the world. the first part reviews the reality of the aluminum industry at the global level. The aluminum industry started with the establishment of Aluminium Bahrain (ALBA). including aluminum. which would spur achieving the objectives of the emirate regarding economic diversification." in 2007. following the establishment of Emirates Aluminium (EMAL) in Abu Dhabi and Qatar Aluminium Company Limited "Qatalum. as the engines of future economic growth.Introduction The primary aluminum industry is one of the oldest and most important manufacturing industries that GCC countries have relied upon. etc… This report aims to shed light on the reality and prospects of growth for the aluminum industry in the Emirate of Abu Dhabi. The report runs in into four parts. consistent with the development agenda of the Emirate. In recent years the interest in aluminum industry widely increased. the aluminium industry is deeply interdependent with important economic sectors such as construction. especially that these factors are characteristics of the region. the quest of Abu Dhabi for the aluminum industry is a strategic choice towards economic diversification. in view ongoing global and regional developments in the aluminum industry in recent years. in 1968. The Emirate of Abu Dhabi move towards the aluminum industry was backed by favorable factors as the Emirate enjoys a competitive advantage in this industry at the global level. regionally and internationally intermediate and final industries.

The Aluminum Industry Worldwide: Aluminum is one of the recent modern metals in use compared to other metals such as iron and copper. Due to these advantages. and 23% of the consumption of aluminum worldwide. and manufacturing. and now this industry meets a wide range of uses. features and benefits as a metal with low density. Aluminium can be casted and molded. which account for 31%.aluminum industry in the Gulf Region. due to the use of aluminum products in the very wide variety of applications. until aluminum turned as one of the most important mineral industry at the moment. a good conductor of heat. particularly in the sectors of transport and communications. the industry of final aluminum products has seen tremendous expansion in recent years. in addition to the possibility of being recycling as a whole. Its exploration and extraction processes had gone through many stages which witnessed various technical and economic developments. REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 3 . and construction. The third part examines the reality of the industry in the Emirate of Abu Dhabi and the future prospects for development. and easily machined or formed. and one of minerals most amenable to an extrusion and forging. The reason behind the diversity of uses of aluminum is that aluminium has certain characteristics. respectively. highly resistant to rust. the second most common flexible metal. Part four of the report winds up with summary and recommendations.

7 million tons during the same year. This surplus helped to increase the global stock of primary aluminum from 4. while world consumption was nearly 38.Fig (1) Global Consumption of Aluminum by Use Other 17% Electrical Conductors 11% Packing 18% Transport & Communications 31% Building & Construction 23.(2) Stock Source: Gulf Aluminium Council. 8006 04350 01002 0044 3080 8000 10000 05338 8306 3608 10000 04180 8400 1024 REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 4 .9 million tons in 2010.6 million metric tons.4 million tons in 2008 to 6. World production of primary aluminum reached about 41 million metric tons in 2010.5% Source: Gulf Aluminium Council. Table (1) World Production and Consumption of Aluminium (Thousand metric tons) 8005 World Production (1) World Consumption (2) Balance (1). which generated a surplus production of 2.

as it used to hold 26% of global production. production of aluminium now does not exceed 5% of the total world aluminum production in 2009 It was noted that China became a significant producer of primary aluminium in 2009. However. China become an importer of aluminum since 2009. importing 1. accounting for more than 36% of world production. The United States was the leading consumer and producer of aluminum in the world in 1980. The U. after being an exporter of about 12 thousand tons. 2007and 2006 respectively Fig (2) The Change in Global Production of Aluminium by Regions (1980 – 2009) Oceania 3% Latin / America 5% USA 26% 1980 Chia 3% Asia 14% Latin America 7% UAS 5% %8 ‫كندا‬ Oceania 6% 2009 Africa 4% Africa 3% China 36% Western Bloc 22% Eastern Bloc 13% Canada 6% Asia 11% Eastern Eurore 18% Western Europe 10% REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 5 .The regions of production and consumption of aluminum in the world have changed during the past three decades. and 548 thousand tons in 2008.4 million metric tons. 49 thousand tons. this production was not enough to meet the increasing needs of local Chinese industries which depend on primary aluminium as input to the production of many important products.S.

Brazil. In March 2005. The company's maximum production capacity is estimated at 1. which is the main material in aluminum manufacturing. The geographical distribution of the production of aluminum is different from the geographical distribution of the production of bauxite. which included increasing production capacity until it reached 450 thousand metric tons per year in 1992. necessary for the manufacturing of aluminum. India. "Alba" raised its annual production capacity to 870 thousand metric tons. the availability of energy sources has supported the emergence of the aluminum industry as one of the oldest manufacturing industries in the region. the company has seen many developments over years.Source: Gulf Aluminium Council. Guinea. as the Aluminium Bahrain Company "Alba" was founded in 1968. Australia. Oceania 23%.S. The company started production in 1971 with a production capacity of 120 thousand metric tons.2 million metric tons per year. Geological Survey issued in January 2011 shows that Africa accounted for 32% of the bauxite resources in the world. many of the producing countries of bauxite do not produce aluminum because production is closely linked to cheap energy. The Aluminum Industry in the Gulf Region: Although the GCC countries do not have large reserves of bauxite. which if reached. and this energy is not available in most bauxite producing countries The U. South America and the Caribbean 21%. Vietnam. would contribute to ensuring the optimal production as a result of economies of scale REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 6 . and Jamaica hold the majority of the world's reserves of bauxite ore 1. while Asia accounts for 18% of these resources. however.

laboratories. "Dubal" smelter now stands as one of the largest modern aluminum smelters in the world. Consequently. Through a series of successive expansion projects. extrusion billet for construction. and ancillary infrastructure facilities for power generation in addition to poles manufacturing plant. Expansion stages included adding many production lines. "Dubal" Plant's main facilities currently include a smelter with capacity of more than 950 thousand metric tons per year.Dubai Aluminum Company "Dubal". a 30 million gallons per day water desalination plant. was established in 1975. the total production of Dubal went up by more than seven folds. the company began production in 1979. port and storage facilities "Dubal" can produce aluminium in three forms: foundry alloy for automotive applications. port and storage. Table (2) The Capacity of the Aluminium Smelters in GCC Countries Production per Year of Country Company annum(Thous Ownership Production and metric tons) REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 7 . as a company wholly owned by the Government of Dubai. while commercial production began in 1981 with a capacity of 135 thousand metric tons per annum. a large carbon plant. and high purity aluminium for the electronics and aerospace. foundry operations of the. a 2350 MW power station. areas. industrial. forging and transportation purposes.

and Rio Tinto Alcan (20%) with a capacity of 360 thousand metric tons per year Qatar Aluminium Company Limited "Qatalum" was established as a joint venture between Qatar Petroleum and Norsk Hydro of Norway. 252 0202 In light of the economic boom witnessed by the countries of the region in recent years. REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 8 .5% Sabic 21. 78. Ma'aden of Saudi Arabia is developing a joint project of aluminum with Alcoa Inc. where each partner owns 50% of the shares of the company.5% Oman Oil Company 40% ADWEA – Abu Dhabi 40% Rio Tinto Alcan 20% Qatar Petroleum 50% Hydro – Norway 50% Saudi Arabia Bahrain Alba 542 0640 Oman Sohar 032 0225 Qatar Qatalum Source: Gulf Aluminium Council. attention increased in the region for aluminum manufacturing as a strategic option to diversify the economy.UAE Abu Dhabi Dubai Emal Dubal Ma'aden 720 950 402 0202 0646 0200 Mubadala 50% Dubal 50% Dubai Govt. which owns 25% of the project. The total production in the first phase of the project was scheduled to reach about 585 thousand metric tons per annum of primary aluminum. ADWEA Abu Dhabi (40%). compared to 75% for Ma'aden. Sohar Aluminium in Oman was founded through a coalition of three major shareholders: Oman Oil Company (40%). The project seeks to exploit the bauxite resources of Saudi Arabia by mining and exporting of finished products to local and global markets. of America. 100% Ma'aden 75% Alcoa US 25% Bahrain Govt.

drums and chips of aluminum REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 9 . 13 of which are in the UAE. where there are about 27 firms for the production aluminum alloy. equivalent to 48% of the total Gulf investments in this industry. so these industries can obtain the molten aluminum directly instead of remelting it. The company has allocated two hundred hectares of land adjacent to the smelter site in the Sohar industrial area for the development of manufacturing industries. UAE's investment alone amounts to $ 10. windows and facades.3 billion. Due to the integration of aluminum manufacturing with intermediate and final industries. for example "Sohar" company allocated 60% of the annual production capacity of the smelter for local manufacturing companies. At present. as well as a number of factories for the production of household appliances. producing doors. while Saudi Arabia ranked second with 7 factories and the Kingdom of Bahrain with 5 plants The total Gulf investment in the aluminium industry is about $ 22. thereby significantly reducing the cost of production at these plants.7 billion in the UAE. there are many companies that work on the manufacture of intermediate and final aluminum products in the GCC countries. cans.The production capacity of the project is 720 thousand metric tons per year. Most of the manufacturing industries that produce finished aluminum products in the GCC countries are concentrated in projects that serve the building and construction sector. the GCC private sector was encouraged to set up a number of industries that depend on primary aluminum as an input to production.

as a joint venture between Mubadala Development Company "Mubadala".7 billion.1 The Reality of the Aluminium Industry Within the strategy of the Emirate of Abu Dhabi Industrial which aims at encouraging economic diversification. came the establishment of Emirates Aluminium "EMAL" in 2007.Table (3) Aluminum Alloy Production Statistics in GCC Countries Country No. the first phase was completed at a cost of U. of Plants Amount of Investment ($ billions) 0204 200 000 001 205 0000 Number of workers thousand) 206 000 100 002 000 0100 UAE Saudi Arabia Bahrain Oman Qatar total Source: Gulf Aluminium Council 00 4 2 0 0 04 2. and included the building of 756 cell production cell along two production lines. and Dubai Aluminium Company Limited "Dubal". The Aluminum Industry in the Emirate of Abu Dhabi 2. a 2000 MW power plant. $ 5.S. a factory for the production of positive electrodes and a multiproduct foundry REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 10 . The project is being implemented in two phases.

which reduces the cost of production at these plants. in addition to the packaging and construction sectors. which constitute about 27% of the global average cost of production. and provide gas for the power plant. It is expected that the total production capacity of the project by the end of the second phase. and alloy standard aluminium alloy.The project is located in Khalifa Port and Industrial Area at Al Taweelah. would jump to 1. as main input for the production of primary aluminum . extrusion billets. automobiles and technology. and alloy sheets and high purity aluminum ingot. to enabling these industries obtain aluminum alloy and cast. These advantageous features include the low cost energy. making "EMAL" the largest single site for the production of aluminum in the world The project's products meet the needs of a number of industrial sectors such as aviation.5 million tons of aluminum annually. as an activity which is profitable and supportive of growth. accounts for about 44% of the average cost of global production. the Emirate of Abu Dhabi has built a complete infrastructure in the industrial cities. Despite that the Emirate of Abu Dhabi does not have the reserves of bauxite. The products of "EMAL" constitute a prime resource for high-quality aluminum products for the electronics components industry. especially the Khalifa Industrial zone where "EMAL" is set. the Emirate it has many advantages that enhance the possibility of developing the aluminum industry. thus ensuring long-term energy supplies The current production capacity of the project is 750 thousand tons per year. which is planned to include parks in manufacturing industries parks around "EMAL" smelter. knowing that bauxite. however. and its site near the port would facilitate in flow of raw materials. including a variety of primary aluminum products. and enhances the aluminum industry to assume a leading role in supporting economic diversification REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 11 . And which . In addition to the above.

and also benefit from the advantages of competitiveness provided by the industrial zone at the Khalifa Port. such as aluminum alloy. which was founded in collaboration with "MEDAL Cables" Company-Bahrain. REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 12 . An agreement with Gulf Aluminium Extrusion Company was made for establishing an aluminum clips and extrusion factory. In this context. and by attracting investment in manufacturing industries. including the United Cable Company.Fig (3) The world Average Cost of Production of Primary Aluminium %10 ‫أخرى‬ %9‫الكربون‬ Labor 8 % Aluminium 44% Enerrgy%27 Source: Gulf Aluminium Council The Emirate of Abu Dhabi pursue a comprehensive strategy to develop the aluminum industry by focusing on the concept of industrial clusters. liquefied aluminum. the Abu Dhabi Basic Industries Company "ADBIC" held several strategic partnerships. which can depend on the "EMAL" smelter. for provision of required production inputs. with a number of specialized companies to establish manufacturing entities for aluminum industries.

EMAL" Company is working with universities in the country to support undergraduate majors related to mining engineering and aluminum industries. to ensure to a successful career with the company. It will provide about 2000 job opportunities directly through the stages of operation. workers. including operations. and that the Emirate of Abu Dhabi would occupies a privileged global position in the industry in the coming years. Emiratization constitutes basic strategy human resources in the company. 0 The Prospects for the Aluminum Industry in the Emirate of Abu Dhabi: The establishment of "EMAL" company formed a start towards turning the Emirate of Abu Dhabi and the UAE into a regional center in the aluminum industry. which has developed an integrated program of Emiratization which extends over five-years. in terms of skills and experience. and confirmed that the UAE would lead the region in this important industry. namely: mechanical. for employment of UAE nationals in a broad spectrum of functions and locations. Preference is given to the disciplines relevant to the current and future needs of "EMAL". each according to his competence and educational level. engineers and administrators. as coordination with universities in this context. REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 13 . would help in providing a future cadre of qualified graduates. contractors. support and management. The scholarship program funded by the "EMAL" provides significant opportunities for young Emiratis who enroll in local universities to benefit from the comprehensive grants in disciplines related to the aluminum industry.0 Employment Opportunities for Citizens in the Aluminum Industry EMAL" through the various stages of construction used the expertise of some 19 thousand employees. The program aims at attracting at least 115 UAE nationals each year to work with "EMAL". chemical and electrical engineering.

and the entry of a number of new players this sector. .The entry of Abu Dhabi in the aluminium industry is expected to provide major economic benefits in the long run. especially as it would form a strong basis for the establishment of promising local manufacturing industries. which is used as an input to production in these industries. there are a number of challenges that may face the aluminum industry in the emirate. This industry will be a provider of many opportunities for career development in a wide range of disciplines which would include citizens and expatriates alike. III. However. which should be taken into account so as not to hamper one of the promising industries on which the Emirate counts in its agenda of development contained in the "Economic Vision 2030". in the area. The creation of a new generation of national cadres with expertise in the aluminum industry: One of the important challenges is to increase awareness about the aluminum industry. particularly in European markets. is the need to promote and increase investment in manufacturing industries. in fields of final products of aluminum. and to establish REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 14 II. and focus on major value added industries as a hub for development in the Emirate of Abu Dhabi. and the accumulation of stock. especially with the increasing production of aluminum in the region. Production marketing: "EMAL" may face challenge on penetrating world markets and competing with top investors in this kind of industry. It should be noted that the some aluminium products of the GCC countries are facing some of the tariff barriers. This would enable Abu Dhabi to occupy a privileged position within the programs of economic diversification. which generates strong competition between these companies in light of the excess of world production over consumption. These challenges can be summarized as follows : I. which impose tariffs by 6% on imports of primary aluminum to protect their markets The development of aluminium value added industries sector: There is an important challenge facing the Emirate of Abu Dhabi in this regard. to come out with products of higher value compared to produce primary aluminum. Investment in manufacturing industries will support the marketing ability of "Emal through the creation of internal channels for the marketing of primary aluminum.

I REALITY AND PROSPECTS OF ALUMINUM INDUSTRY IN THE EMIRATE OF ABU DHABI 15 . constitutes more than one third of the aluminum industry in the world. and the surge of existing companies to increase their productivity. Facing this challenge properly would help to achieve more than one objective. where the energy required to recycle aluminum products is equal only to 5% of the energy needed to manufacture primary aluminum from natural raw materials. Firstly. so as to create a generation of national cadres capable of coping with advancement. most importantly is the scrap resulting from the factories and workshops. institutions aimed at training and qualifying national cadres to work in the industry. where the recycling process accounts for 5% of these gas emissions. Maximizing the utilization of aluminum waste: There is an important challenge in the optimal exploitation of aluminum waste. especially that the recycling of waste aluminum. to preserve the environment by getting rid of waste in a safe manner. then the ensuring of a stable supply of raw materials may be a significant challenge that must be taken into account in the long run. as well as to reduce emission of gases that help global warming. V. Secondly.IV. VI. and the lack of reserves of bauxite in the Emirate of Abu Dhabi. Securing the needs of raw materials necessary for industry: In the light of the growing number of companies working on the manufacture of aluminum. to increase efficiency by reducing energy consumption.

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