The GCC is poised to become a primary aluminium production powerhouse over the next decade and is expected to contribute over 13 per cent of the worlds aluminum production by 2013.
Production
The total primary aluminium production in 2010 stood at 3.17 Mn Metric Tonnes (MT) and reached 3.69 Mn MT in 2011 at 16 per cent growth over 2010. The growth has primarily been due to Qatalum reaching full capacity of its first phase in 2011, after power outage issues in the second half of 2010, when production was halted resulting in losses.
The aluminium industry in GCC contributes 4-12 per cent to the regional Gross Domestic Product (GDP).
Growth and investment
According to Frost & Sullivan, growth of the primary aluminium industry in the GCC will outperform the rest of MENA. Key GCC countries like the KSA, Qatar, Oman and UAE (Abu Dhabi) will have increased primary production either due to new commissioning of aluminium smelters or phase two expansions of their existing capacities.
The report states that investments in the GCC aluminium industry are currently estimated at around USD 30 billion and may reach as much as USD 55 billion by 2020.
The aluminium industry in the MENA region is expected to grow in the short and medium terms (2 to 5 years) provided the primary aluminium smelting capacities are commissioned, as per plan.
Challenges and opportunities?
Hazardous waste generated from aluminium production is a concern, as currently GCC has no means to treat it. However, GCC is actively looking to secure third party services to cater to the region's six smelters and effectively treat this waste in the coming 3-5 years.
Political instability in the region especially in Bahrain and Oman has served as a cause for reluctance in new investments especially in downstream production.
The transformation of scrap into recycled aluminium alloys requires approximately five per cent of the energy input needed to produce primary aluminium from bauxite. This phenomenon is catching up in the MENA region; as a result many downstream aluminium players and primary aluminium smelters are taking up greener initiatives to reduce their carbon footprints.
It is expected that in the next 10 years the secondary aluminium market in the GCC would be a key contributor to the recycling Industry and will create employment opportunities.
Overall strategy
The aluminium downstream industries will have a great scope to localize products which are currently imported from a few regular import partners.
Key end-user segments in the MENA region that would contribute significantly to macro and micro growth are construction, electrical, packaging and industrial based applications which are expected to play a significant role during the next 5-10 years.
The ability to deal with constant fluctuations in London Metal Exchange (LME) prices of aluminium would be the greatest challenge going forward, along with the economics of scale, regular supply of feedstock and environmental issues.
