Oman’s Sohar Aluminium, owned 40 per cent by OQ – the Sultanate’s integrated global energy group – closed pandemic-impacted 2020 with “positive bottom-line results” despite a collapse in global aluminium prices on the London Metal Exchange (LME) last year.

The joint venture, which owns and operates a world-scale smelter in Suhar, described 2020 as an “abnormal year” that sent aluminium prices on the LME tumbling to below $1,500 per tonne in the second quarter of the year.

“In spite of difficult market situations, Sohar Aluminium concluded the year with positive financial results above Business Plan supported by lower cost of production coupled with an increase in production volume,” the company stated in its 2020 Sustainability Report.

It cited in this regard measures it had adopted to alleviate pressure on its cash-flow in the wake of the price collapse. “The Company had urgently taken a number of measures to keep cash-flow positive. Capex budget was reduced by 35 per cent with a proper risk assessment and rescheduling.

Controllable costs had been reviewed deeply and made significant budget cuts that touched all areas carefully without impacting safety and quality. The measures which had been taken have proven their effectiveness on the financial performance. The company had positive bottom-line results and met all financial commitments,” the company noted.

Commenting on the company’s overall performance last year, Eng Said bin Mohammed al Masoudi, CEO, said: “Through 2020, and despite the challenges posed by Covid-19 pandemic, both our operational and non-operational performances have witnessed steadily increasing improvements. For instance, in the health and safety pillars, we closed the year with the lowest rate of injury, and the lowest number of Significant Potential Incidents (SPIs) in our history. Also 37 per cent of our 396,929 tonnes of primary aluminium that were produced in 2020 were delivered to our local downstream customers.”

Sohar Alumiumium achieved major milestones depsite facing difficult market conditions

Production Record

Notwithstanding the challenges posed by the constrained global economic environment, Sohar Aluminium’s $2.4 billion mega industrial complex in Suhar reported record aluminium production last year. Hot metal production rose to 396,929 tonnes, up 1.64 per cent from the previous year’s tally of 390,516 tonnes, the highest in the company’s history. Metal purity also reached the highest level in its history at 593.08 ppm of Fe/ tonne of metal.

Other notable productivity achievements during 2020 were: it achieved 0.16 Anode Effect per pot day at Potline; achieved 97.83 per cent Power Plant Availability; achieved total of 10.000 monthly Green + Baked anodes inventory and achieved Master PM compliance greater than 95 per cent in all areas from Smelter, Port and SAPP.

The company continued the successful deployment of the Lean Six Sigma methodology by implementing several key projects through its Green and Black Belts. All these achievements were crowned by winning the 1st position for His Majesty the Sultan’s Award for Industrial Excellence 2021.

Also in 2020, the company witnessed great achievements in its Environment, Health and Safety, Productivity and Incremental Improvements, People and Community, Innovation and Growth, Financial Strength, and Customer Satisfaction strategic objectives.

One of the major achievements was the outstanding results of the Value Creation Programme that saw savings above set targets. Also, the injury rate, significant potential incidents, and hydrogen fluoride emissions witnessed substantial decrease throughout the year.

The company supplies 60 per cent of its production to the local downstream customers

Future-Proofs its Ops

Further, Sohar Aluminium continues to look to harness the transformational potential of the Fourth Industrial Revolution (Industry 4.0) to position itself as a ‘smelter of the future’. The company has made advanced technology a priority ever since its formation in 2004, implementing automation and robotics within the smelter’s Casthouse’s operations from the beginning in order to minimise the interaction of human operator with unsafe material and therefore reducing the risk of injury. Robotic cranes, for example, assist in the stacking of refined metal bundles and applying labels.

Continuous effort

The company continued the ongoing plant-wide awareness programme designed to ensure that its technical staff are on-board with the delivery of the project. It has embraced some elements of Industry 4.0 ever since it came on stream and it continue to evaluate and adopt new technologies and innovations as they materialise. This is a continuous journey of improvement which the company does not foresee an end to. Technologies keep evolving and our responsibility is to be at the forefront of the new inventions, to enhance our productivity, cost-efficiency, and competitiveness.

Supporting the development of Oman Sohar Aluminium is considered one of the leading efficacious projects in diversifying the Omani economy. It differs from most other industries as it is not petrochemical-based, although it relies on natural gas to generate the necessary power for its smelting operations.

The company invests heavily in improving the local and national economy and promoting In-Country Value (ICV) creation. It supports potential future investment opportunities in aluminium downstream companies, further contributing to the Sultanate’s long-term vision for a diversified economy.

The company supplies 60 per cent of its production to the local downstream customers in the form of hot metal, contributing significantly to In-Country Value.

Wherever possible, Sohar Aluminium procures locally and supports small and medium-sized enterprises (SMEs). It has also had a significant effect on the economic development of the surrounding region by increasing commercial activities through its efforts to boost the local suppliers’ base and support aluminium downstream factories to supply hot metal required for their processes.

In 2020, over half of the SA suppliers were local. Apart from the materials that SA imports from abroad, it has spent over $36.9 million on local vendors.

Established in 2004 as a greenfield smelter, Sohar Aluminium is jointly owned by the Omani government (40 per cent) represented by OQ – Oman’s integrated energy group; Abu Dhabi National Energy Company PJSC – Taqa (40 per cent), and leading global mining group Rio Tinto (20 per cent). Electricity as the principal energy source for the 390,000 tonne-capacity smelter comes from a 1,000 MW captive power plant located at Sohar Port. The project also has its own dedicated waterfront berth at the port for the unloading of alumina and other raw materials.