Emirates Global Aluminium (EGA), one of the world’s largest aluminium producers, has said that technology innovation will continue to be an important part of its competitive advantage.

The largest industrial project in the UAE outside oil and gas makes a significant investment in technology and in research and development (R&D) and has invested heavily in developing proprietary new-generation reduction cell technologies.

In 2016, EGA, which operates aluminium smelters in Jebel Ali in Dubai and in Al Taweelah in Abu Dhabi, became the first UAE industrial company to license its own large-scale industrial technology internationally.

The company recently completed a three-year, $300 million project to replace older production lines at its Jebel Ali aluminium smelter with the company’s own UAE-developed technology, boosting production capacity and reducing costs and environmental emissions.

Kalban: focussing on innovation

All EGA’s 2,777 reduction cells, the swimming-pool sized tanks in which aluminium is smelted, now run on home-grown technology, according to a statement from the company.

“We have focused on developing our technology for more than 25 years. We have used our own technology for every smelter expansion since the 1990s, including the construction of Al Taweelah, which was the world’s largest single-site smelter when it was completed,” Abdulla Kalban, managing director and chief executive officer of EGA, said in an interview with the Gulf Industry.

The 520 reduction cells at Potline 1 and Potline 3 at EGA Jebel Ali were the company’s oldest and were originally built from 1979. The new reduction cells each have the capacity to produce 20 per cent more aluminium than those they replaced, with 10 per cent less specific energy consumption to manufacture each tonne of metal, the company said.

EGA produces one out of every 25 tonnes of aluminium made worldwide, making the UAE the world’s fifth biggest aluminium producing nation. In 2016, it produced some 2.5 million tonnes of aluminium, its highest ever production.

It is the largest producer in the UAE’s aluminium industry, accounting for over half of the Gulf’s aluminium output. Aluminium is the largest made-in-the-UAE export after oil and gas.

EGA was formed in 2014 as an equally shared joint venture between Abu Dhabi’s state investment vehicle Mubadala Investment Co and the state-owned Investment Corporation of Dubai. It consolidated the aluminium-focused businesses of these two state investment funds, namely Dubai Aluminium and Emirates Aluminium.

PREMIUM POSITIONING

The UAE-based company, which has positioned itself as a producer of high performance aluminium products, said it is continuing its focus on high-end products, used by the technology and automotive industries. EGA’s product range includes 370 individual products that are made to customer specifications.

“EGA is one of the world’s leading ‘premium aluminium’ producers – we produce amongst the highest volume of value-added products of any company,” Kalban said.

The company creates additional value from its primary aluminium since value added products attract higher premiums than standard aluminium.

“We not only supply our customers with the exact aluminium they need, we also help them understand what they need and advise them how they can get the best out of their metal,” he added.

EGA works on innovative projects with customers and academics to develop new alloys and enable better understanding of the mechanical properties of existing alloys.

“Our technical experts also advise customers, at their request, on the best and most cost-effective alloys to meet their mechanical requirements.

“We work with customers to help them improve their own manufacturing processes as and when required, and we use our expertise in aluminium to help customers understand their manufacturing challenges and how to overcome them,” he elaborated.

According to Kalban, some 75 per cent of its customers have bought its aluminium for more than 10 years, demonstrating its innovation and market leadership, while some 90 per cent of its customers are repeat customers. In the UAE, EGA’s aluminium has been used in the Burj Khalifa, Etihad Towers and Dubai Metro, and in many products people use from cars to smartphones and planes.

EXPANSION STRATEGY

Having been born out of 2014’s merger between Dubai Aluminium and Emirates Aluminium, EGA is currently undertaking a restructuring as part of wider efforts to expand its smelting capacity, according to an analysis of the company by BMI Research, a unit of Fitch group.

The company has already completed a Phase 2 expansion of its smelting facility in the UAE, which took production capacity up to 1.3 million tonnes per year (mtpa) at the end of 2014. It is reportedly investing about $3 billion to increase capacity at the Dubai smelter. The refinery will be constructed in two phases, each of which will boost the firm’s production capacity by an additional 2 mtpa, the BMI report added.

The first phase is scheduled to be completed by end-2017, making the company the fourth-biggest producer of aluminium in the world. The company has looked to scale back costs as part of its restructuring efforts and, in July 2015, reduced the size of its workforce by 4 per cent, losing 250 jobs to non-industrial support positions in the process.

“EGA’s is one of the longest-established industrial companies in the UAE – we began smelting aluminium in Dubai in 1979,” Kalban said and continued: “Today we are expanding upstream and internationally.” EGA is currently building Al Taweelah alumina refinery next to its Al Taweelah aluminium smelter. The refinery will process bauxite ore into alumina, which is the feedstock for aluminium smelters. On completion, the Al Taweelah alumina refinery will help reduce the UAE’s dependence on imported alumina.

EGA workers inspecting aluminium sows

Al Taweelah alumina refinery is the first to be built in the UAE and will meet 40 per cent of EGA’s alumina requirements, according to EGA.

The aluminium production process begins with bauxite, which is the feedstock for alumina refineries. EGA is developing a bauxite mine and associated export facilities in the Republic of Guinea, clearly an effort by the company to become a vertically integrated aluminium producer.

“Our project is the largest greenfield investment in Guinea in four decades. On completion, EGA will become a global supplier of bauxite,” he added.

According to the BMI report, EGA signed a $5 billion agreement with Guinea’s government to develop the mine in 2013. Phase 1 of the mining project aims to produce 8-12 million tonnes of bauxite for export. Phase two will involve the construction of a 2m t capacity alumina refinery in the country. A feasibility study was completed at the mine in June 2016 with Phase 1 of production scheduled for 2018, the report added.

The mine supply of aluminium ore for EGA’s primary production facilities in the UAE, with some of the bauxite to be exported to China as well as other Asian markets. Construction work began at the mine in June 2016, with the project being managed by EGA subsidiary Guinea Alumina Corporation.

EXPORTS THRUST

EGA’s overseas expansion is expected to coincide with the broadening of its export market. At present the company’s revenues are determined heavily on the Middle East and North Africa (Mena) and Asia-Pacific regions, which account for around two-thirds of total sales.

The company is aiming to increase its European and Americas client base, which should be assisted by the establishing of its West African base.

“Around 90 per cent of our production is exported. But an increasing proportion is sold at home,” Kalban said.

“There are 26 companies in the UAE making products using EGA’s aluminium. The aluminium sector as a whole employs around 30,000 people – our sector is the largest employer amongst the UAE’s energy intensive industries.

“We export aluminium to more than 60 countries worldwide, and make over 10,000 shipments per year, in over 100,000 containers,” he added.

EGA increased its net profit by 10 per cent in 2016 to Dh2.1 billion ($570 million) despite a fall in revenue. Kalban said EGA survived the sharp drop in commodity prices in 2015 by keeping costs down. Results of the current financial year are yet to be released.

Meanwhile, the recent news of a planned IPO of the company is reported to be part of a wider strategy by Mubadala to capitalise on the recovery in commodities prices, as well as long-term efforts to diversify the economy of the UAE away from its current reliance on oil, BMI said in its analysis.