One of the success stories in the Middle East’s efforts to diversify its economy beyond oil and gas, the Gulf’s expanding aluminium industry is rapidly becoming one of the key players in the global aluminium sector. In the process, it is boosting foreign trade, creating jobs and establishing itself as one of the industrialisation engines in the region.

There are several reasons for the rise of the UAE’s primary aluminium industry – and indeed that of the Gulf region – as a global industry powerhouse. Local aluminium producers benefit not only from readily-available energy sources, but also a strategic geographic location between East and West, offering easy reach to major aluminium markets from as far afield as the Americas and the Far East, and everywhere in between.

The prospects are excellent too: aluminium is an industry for the future. The metal is increasingly being used by the automotive industry to create lighter vehicles that meet stringent environmental demands, using less fuel and creating fewer emissions in the process. It’s also become a staple of the building industry, where it has led to sweeping changes in building techniques due to its light weight and flexibility. Best of all, aluminium is 100 per cent recyclable.

LOCALLY BUILD GLOBAL GIANT

Heading the Gulf aluminium industry’s drive into local and international markets alike is the UAE-based industrial flagship Emirates Global Aluminium (EGA) – the aluminium giant formed by Mubadala Development Company of Abu Dhabi and Investment Corporation of Dubai by combining their respective interests in the aluminium sector. EGA’s two core operating assets are Dubai Aluminium (Dubal) and Emirates Aluminium Company Limited (Emal), whose combined annual production capacity of 2.4 million tonnes represents about half of the total primary aluminium production capacity in the Gulf at present; and makes EGA one of the world’s five largest primary aluminium producers.

EGA’s annual production capacity from its Dubal and Emal assets is 2.4 million tonnes, about half the Gulf’s primary aluminium capacity

This is a remarkable achievement for a company that poured its first metal in 1979. A proudly Emirati company, EGA is led by UAE nationals and uses proprietary, in-house developed technology to produce superior quality, premium purity aluminium that is shipped to more than 350 customers in almost 70 countries across the globe. Both the Dubal and Emal smelter complexes are certified to numerous international standards and regularly receive independent international, regional and local accolades.

Products are manufactured in three main categories: re-melt alloys (high purity for electronics and aerospace industries; and foundry for automotive applications); billet (used in construction, industrial, transportation, automotive, forging and electronics); and sheet ingot (packaging, lithographic sheets and the automotive industry). Since inception, the company’s entire production has been pre-sold every year, with some 92 per cent being destined for export markets.

The local market is becoming an increasingly important component of the Gulf aluminium industry. EGA has supplied metal to the local market since Dubal’s inception in 1979, and currently delivers more than 200,000 tonnes a year to the UAE downstream industry alone. Around 21 per cent of annual production was delivered to the greater GCC and Mena regions in 2013, mostly for use in construction and infrastructure development projects.

Since inception, the UAE’s primary aluminium industry has become a major contributor to the non-oil sector of the national economy (GDP plus proportion of exports); and EGA’s contribution to the UAE GDP is forecast at $6 billion by 2018. The company employs 7,200 people directly, with the potential to create another 8,000 direct jobs in the UAE by 2020; and provides further indirect spin-offs through employee spend and corporate spend channelled through local providers. EGA is strongly committed to Emiratisation as a key contributor to socio-economic development in the region, with UAE nationals accounting for 18 per cent of its total workforce (the proportion is more than 70 per cent at senior management level).

DOWNSTREAM SUPPORT

The UAE’s aluminium industry also provides significant opportunities for downstream industries in other sectors, including supply, shipping and logistics. EGA already provides indirect employment to 19,000 people in the UAE aluminium sector through outsourcing and local purchases. It is envisaged that EGA will create a further 6,000 indirect jobs by 2020, thus raising the total number of indirect employment opportunities to 25,000.

EGA is particularly supportive of efforts to create aluminium clusters, creating more jobs and business opportunities in the process. A case in point is the Khalifa Industrial Zone Abu Dhabi (Kizad), of which Emal is the anchor tenant. One of the major draw cards for companies to establish operations in Kizad is the option to have hot, molten aluminium piped directly into their plants from Emal. Apart from the ability to create innovative new products, companies that take advantage of this will benefit by eliminating transport costs, realising massive reductions in energy usage through not having to re-melt cold product, and lowering carbon dioxide emissions, thereby enhancing their environmental credentials. At least three downstream aluminium companies have already signed-up in Kizad, confirming the future growth potential of the Gulf aluminium industry.