A furnace at Bamco

A furnace at Bamco

Bamco focusing on optimisation

January, 2016

Higher premium prices for metal from Aluminium Bahrain (Alba) and generally weak market conditions globally have forced Bahrain Alloys Manufacturing Company (Bamco) to curtail production significantly
in 2015.

Total output at Bamco’s plant, located near the Alba plant, was approximately 24,000 tonnes in 2015 against some 30,000 tonnes in the previous year. In 2015, Bamco received from Alba some 21,500 tonnes of hot and liquid metal, a significant reduction in offtake from the 2014 figure of 25,000 tonnes.

Wheel alloys, which in years past were the mainstay of the company’s income, now contribute just 15 per cent of the turnover. Other foundry alloy products that Bamco makes are used for cylinder-heads in the automotive industry and in general die casting operations used by firms that make products such as pumps, pistons and cables.

Bamco faces fierce competition from primary smelters including regional producers such as Alba, Dubal, Emal and Qatalum. The smelters are now willing to supply customers requiring smaller quantities of wheel alloys than they earlier catered to, leaving Bamco to meet only very low tonnage orders.

“We’ve been seeing a general softening in the market in November and December. While that’s typical because companies run their stocks down at this time of year, there’s also an impact from the weak world market,” said Bamco’s general manager David Williams.

A view of the inside of the Bamco plant

A view of the inside of the Bamco plant

Bamco exports nearly all of its production. The foundry alloys are shipped in 7 kg ingots to more than 25 countries, the biggest markets being India and Indonesia and both accounting for around 40 per cent of exports. The other major markets are Europe 15 per cent, Japan 12 per cent and Malaysia and South Korea 6 per cent each. Exports also go to countries including the US, Mexico, Africa, Australia, New Zealand and Saudi Arabia.

As well as foundry alloys, Bamco makes master alloys, whose output in 2015 was 4,500 tonnes against 4,000 tonnes in the previous year. Bamco is possibly the largest producer in the world of a product called aluminium silicon 50 per cent primary grade, which accounts for about 60 per cent of the master alloys it makes. The product is used in remelting operations and the regional buyers are Garmco in Bahrain and Alupco in Saudi Arabia. Outside the region, master alloys are exported to Europe, South Africa, Malaysia, USA, Australia and Thailand.

The New Year could be extremely challenging, depending on the price Alba charges for its metal and conditions in the marketplace, said Williams. The company is seeking to optimise its business by focusing more on foundry alloys not typically made by the smelters and also on master alloys and markets most likely to buy these products.

“The US economic situation is positive and it’s possible we’ll see an expanded market there for our products,” observed Williams.

This is the second challenging period Bamco is facing since it began commercial production in 1996. The first was during the global economic downturn for a period after 2008. The company recovered its markets in 2011.

Bamco’s main shareholders are Hightech Metals Investment GmbH of Germany and Bahrain’s Al Fanar Investment Holding Co.

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