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GCC ‘set to become aluminum powerhouse’

The aluminum industry in the GCC region is on the brink of becoming a leading global contributor with 13 per cent of the global production by 2013, according to a new report by Deloitte Middle East.

The UAE, Oman, Bahrain, and Qatar are all home to some of the largest aluminum smelters in the world, said Deloitte in its new publication titled “GCC: Tomorrow’s aluminum powerhouse.” Five smelters exist in the GCC today with a combined production capacity of just under 3.6 million tons, said the report, adding that their cumulative contribution to total global production in 2010 was estimated at 7 per cent.

Considering the fact that Ma’aden, a sixth smelter in Saudi, is set to be operational by 2013 and Emal’s robust expansion is scheduled for completion by 2014, the GCC is poised to become a primary aluminum production powerhouse with the expectation that the region will contribute to over 13 per cent of world’s aluminum production by 2013.

“Given the affordability of power and labor in the GCC region, the local aluminum industry as a whole is conducive to investment,” said Mahmood Daylami, secretary general of the Gulf Aluminum Council, (GAC).

‘Increasing costs is becoming critical for more and more primary producers around the globe, and therefore the Gulf presents a viable and attractive venue for investment in aluminum production across the entire industry’s value chain,’ explained Daylami.

‘Furthermore, the GCC smelters are evaluating and studying future expansion plans to increase their global production contribution to a cumulative capacity estimated at 7 million tons per annum by 2020,’ he added.

According to Deloitte, the downstream aluminum industry within the GCC is underdeveloped, and therefore ripe for investment with an estimated 20 per cent of locally-produced primary aluminum is consumed within the GCC. About 50 per cent of locally utilized aluminum is processed further in secondary production and exported to international markets, it stated.

The Deloitte publication also pointed out that another significant opportunity exists to develop the aluminum recycling activity in the region.

The cost advantages for industrial activity in the region coupled with increasing support and encouragement for investment in downstream aluminum operations create an attractive opportunity for investment.

“Although the regional aluminum industry is not without its challenges, its close proximity to end-user markets both throughout the Middle East and Europe is a strong advantage,” said Firas Eid, consulting partner at Deloitte Middle East. “Additionally, strong economic growth across the GCC, particularly in aluminum-intensive industries, the most notable of which is construction, will further fuel the region’s growth in aluminum production and solidify the region as a global leader and pioneer in the industry,” he added.

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