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The $60 million DAC opened shop early this year at Khalifa Industrial Zone of Abu Dhabi (Kizad) in t

The $60 million DAC opened shop early this year at Khalifa Industrial Zone of Abu Dhabi (Kizad) in t



DAC backs industrial supply chain

With product diversification and geographical expansion on its mind, the UAE-based firm is targeting a 10 per cent increase in revenue by the end of this year. PUMMY KAUL reports

November 2018

Ducab Aluminium Company (DAC), a UAE-based manufacturer of aluminium rods and conductors, has made significant inroads into the export markets and is now looking into further expansion to reinforce its growth strategy.

The Dh220 million ($60 million) company, which opened shop early this year at Khalifa Industrial Zone of Abu Dhabi (Kizad), plans to export around 90 per cent of its output to overseas markets and is confident of hitting the export target sales of over Dh300 million in the first year.  Further, it is also considering a portfolio diversification and geographical expansion in the near future, a DAC official told Gulf Industry magazine in an exclusive interview.

“Over the course of 2018, DAC has executed plans to export around 35,000 metric tonnes of product, valued at approximately $79 million according to current market prices,” Ashish Chaturvedy, marketing manager, DAC said.

A joint venture between Abu Dhabi-based Senaat (40 per cent) and Ducab (60 per cent), the new manufacturing facility has the capacity to provide 50,000 metric tonnes of aluminium rods of which 16,000 metric tonnes would be converted to overhead conductor per annum.

“When it comes to exports in particular, we are looking at around 90 per cent of output being exported outside the UAE,” Chaturvedy said.

DAC products are sold to customers across the Gulf Cooperation Council (GCC), the wider Mena region, the US, India, North Africa, East and West Africa. Further expansions are also being considered for Latin America and Europe in the near future.

“GCC in particular and wider Mena region in general, will continue to be the largest consumer of Ducab and DAC products over the foreseeable future. Having said that, Ducab, and DAC both, have been relentlessly working towards developing opportunities in Australasia, India, parts of Africa and northern Europe,” he said.

DAC is the second aluminium project for Senaat in Kizad after Taweelah Aluminium Extrusion Company (Talex), which is a joint venture with Al Ghurair Group’s Gulf Extrusions. For Ducab, the production plant in Kizad will be the company’s sixth in the UAE alongside its three facilities in Musaffah and two in Dubai.

Chaturvedy: seeking new opportunities

Chaturvedy: seeking new opportunities

Targetting a revenue growth of 10 per cent, DAC’s facility has been built close to Emirates Global Aluminium (EGA)’s Al Taweelah aluminium smelter, one of the largest in the world. EGA supplies DAC with molten aluminium along a dedicated ‘hot metal road’, the first in the UAE to link separate industrial sites.

Receiving molten aluminium from EGA eliminates the need for DAC to use high energy to re-melt the metal before use. This saves both costs and environmental emissions.

With product diversification on its mind, DAC is targeting a 10 per cent increase in revenue by the end of this year.

“More value-added products are also planned over the years to come towards the portfolio diversification. DAC would already have supplied overhead conductor for transmission and distribution networks to Utility customers in UAE, Yemen, India, Pakistan, Iraq and Jordan before the end of this year,” Chaturvedy said.

 

Excerpts from the interview:

What was the impetus behind launching a new aluminium company - Ducab Aluminium Company (DAC)? Can you tell us what prompted the company to set up a location in Kizad?

Initial market research showed gaps that existed within the high quality aluminium rod and conductor space within the region; this prompted Senat and Ducab to take the decision to jointly establish Ducab Aluminium Company (DAC).

The proximity of DAC to the EGA’s plant in Kizad also provides an ideal supply chain link for the company, with molten aluminium being delivered directly from EGA’s smelter. Proximity to Port Khalifa is another real advantage for this export-oriented business. Being located in Kizad widens DAC’s business opportunities and further strengthens Ducab’s position on the national and global map of industrial manufacturing. The company adds to a growing number of downstream ventures being developed in Kizad as part of the UAE’s ambitions to further diversify the national economy.

Within the Ducab Group, DAC complements our existing portfolio and allows us to offer our existing copper customers an additional breadth of products required for their business. These customers trust the Ducab brand and prefer to consolidate their relationship with Ducab rather than going to additional partners for their aluminium needs in the electrical supply chain.

Moreover, DAC reduces the UAE’s dependence on imported aluminium products while contributing to a more sustainable ‘Made in UAE’ supply chain and optimising local resources at the
same time.

 

How will Kizad and the UAE benefit from the presence of DAC? How strategic is DAC to the UAE’s economy?

DAC is the result of a Dh220 million investment that ultimately strengthens the UAE’s industrial supply chain by having the capacity to provide 50,000 metric tonnes of aluminium rod and overhead conductor per annum. A joint venture between Ducab and Senaat, the company supports the UAE’s overall industrial strategy championed at the most senior levels of government and across the private sector. Recent figures suggest that the UAE aluminium sector as a whole employs some 30,000 people, making it the largest employer outside the oil and gas sector among the UAE›s energy intensive industries.

Moreover, DAC supports the Abu Dhabi 2030 Economic Vision and overall vision of the UAE by contributing towards the country’s diversification efforts and reducing the UAE’s dependence on imported aluminium products. The facility optimises local resources and contributes to a more sustainable ‘Made in UAE’ supply chain with tailored products needed from a wide diversity of vertical sectors in the country. Additionally, it will help create job opportunities for local talent, both within the engineering and technical fields. The aluminium market is growing in the Middle East, and DAC extends the UAE’s capability to participate in this growth.

 

What are DAC’s main products and their final use? Which industrial segment (automotive, construction, packaging, etc) will DAC cater to?

Throughout its innovative journey, Ducab has continued its strong rate of growth in specialised products by introducing product lines that are designed for specific applications. We are always seeking new opportunities to expand our portfolio to meet the needs of businesses locally and internationally.

Through its new facility located in Kizad, DAC caters to electrical transmission and distribution by manufacturing Electrical Conductive (EC) grade aluminum alloy rods, wires, and bare overhead conductors. These include: aluminium EC rods, manufactured with 99.7 per cent minimum purity and used in cables and overhead conductors; all aluminium conductor, concentric lay stranded conductor and used as bare overhead conductor for distribution lines; aluminium conductor steel reinforced, concentric lay stranded conductor with galvanised steel central core and used in medium, high and extra-high voltage transmission lines; and aluminium conductors aluminium-clad steel reinforced, a concetric-lay stranded conductor with aluminium-clad steel core and used in medium, high and extra-high voltage transmission lines.

 

The new DAC facility has been built close to Emirates Global Aluminium in Kizad. Why is this so important?

EGA is a long-term partner of DAC for the supply of molten aluminium along KIZAD’s ‘Hot Metal Road’. This proximity minimises the environmental impact of a longer supply chain and is also beneficial given that molten metal does not last long in that form. The advanced infrastructure at EGA’s Al Taweelah site also provides a reliable and sustainable source of production and distribution of high-quality aluminium. DAC receives 10 to 12 crucibles per day (140 to 170 tonnes per day) at a temperature of 760 degC.

 

What is the facility’s total production capacity and what will be the actual production in the first year? How much of the metal are you planning to export?

DAC has the capacity to provide 50,000 metric tonnes of aluminium rod of which 16,000 metric tonnes would be converted to overhead conductor per annum. When it comes to exports in particular, we are looking at around 90 per cent of output being exported outside the UAE. DAC products are sold to customers across the Gulf Cooperation Council (GCC), the wider Mena region, the US, India, North Africa, East and West Africa.

Further expansions are also being considered for Latin America and Europe in the near future. Over the course of 2018, DAC has executed plans to export around 35,000 metric tonnes of product, valued at approximately $79 million according to current market prices.

DAC has made important inroads into it export markets and is now

 

What are your expectations for 2018 and 2019 in terms of new downstream agreements, production targets and exports? Which geographic market are you targeting and why? Which area will be your largest export market?

The activities at DAC complement Ducab›s existing portfolio, which has seen the 100 per cent UAE-owned company become a global leader in the development, design, manufacture, marketing and distribution of copper and aluminium wire and cable products. Moving forward we will continue to bring innovation to each of these respective areas. We will also evaluate new opportunities to expand our footprint across core industry verticals, including energy, general construction, oil & gas, industrial, defence, transport, mining and other specialty verticals.

GCC in particular and wider Mena region in general, will continue to be the largest consumer of Ducab and DAC products over the foreseeable future. Having said that, Ducab, and DAC both, have been relentlessly working towards developing opportunities in Australasia, India, parts of Africa and northern Europe.

 

What is your growth strategy for the next three to five years? Where will we see DAC in the next three to five years?

The industry of aluminium products has seen tremendous expansion in recent years and now meets a wide range of industrial uses. The launch of DAC extends the UAE’s industrial capabilities and addresses the growing aluminium market globally. DAC has already signed rod supply contracts to service customers across the GCC, India, LEVANT, North America and select markets in Africa, with further expansions also being planned for Latin America and Europe. More value-added products are also planned over the years to come towards the portfolio diversification. DAC would already have supplied overhead conductor for transmission and distribution networks to Utility customers in UAE, Yemen, India, Pakistan, Iraq and Jordan before the end of this year.

 

What are your revenue expectations for full-year 2018 and 2019?

We anticipate revenue to grow around 10 per cent, driven by our constant efforts to expand and deliver results that support our leadership of the local market and our ambitions to expand into international markets. This diversification of products and geographical expansion will be complemented by more tactical efforts such as the securing of more approvals from the utilities sector for the range of overhead conductors.

There is no doubt that there are many opportunities for us to achieve our objectives, but at Ducab and DAC we study and assess all investment opportunities before taking any action. At the moment, we are studying further areas of expansion and in line with Ducab’s strategic plan to achieve its objectives, and we will inevitably announce these opportunities in a timely manner.

 

The acquisition of national talent is one challenge the Middle East faces continuously. What steps is DAC taking in order to foment the participation of the national workforce

Building strong Emirati talent and driving Emiratisation agendas are key focus for Ducab’s human resources strategy. As such, the company is keen to participate in career fairs and other platforms that reach talented UAE nationals such as Tawdheef in Abu Dhabi and Careers UAE in Dubai, to provide them with the opportunity to join a sector that is fundamental to building a sustainable economy and showcase the inspiring environment that the company provides to its employees through scholarship programs and post-graduate trainings for engineers and non-engineers.




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