UAE To Build $3bn Alumina Refinery By End-2017

State-owned Emirates Global Aluminium plans to spend $3 billion to build the United Arab Emirates’ first alumina refinery in Abu Dhabi, chief executive Abdulla Kalban said on Tuesday.

Feasibility studies have been completed and the refinery will be operational by the end of 2017, Kalban told reporters. Alumina, extracted from bauxite in the refining process, is used to produce primary aluminium.

“We are building the refinery to secure our own important materials,” Kalban said, adding that the refinery would produce 2 million tonnnes of alumina annually in an initial phase and an additional two million tonnes in a second phase.

Emirates Global Aluminium, which has an enterprise value of about $15 billion, was formed by the merger last year of Abu Dhabi’s Emirates Aluminium (Emal) and Dubai Aluminium (Dubal).

Aluminium production in the Gulf has been rising rapidly, partly because of the region’s low energy costs and extensive port facilities, as well as its booming construction industry. The UAE is keen to diversify its economy beyond oil.

Emirates Global Aluminium currently produces 2.4 million tonnes of aluminium products per year. The UAE accounts for about 50 per cent of the Gulf’s annual aluminium production of five million tonnes and is the world’s fourth largest producer of the metal, Kalban said.

He predicted that Emirates Global Aluminium would boost its production by only about 200,000 tonnes over the next six years, but said the outlook for rising demand was solid. About 90 per cent of the UAE’s aluminium production is exported to 68 countries, he said.

“Global demand growth is forecast to sustain at about 5.8 per cent per year till 2020, so we are confident about demand.”

The alumina refinery will be financed through a combination of equity and debt, Kalban added without elaborating.

Emirates Global Aluminium owns bauxite producer Guinea Alumina Corp in Guinea and a 45 per cent stake in bauxite miner Cameroon Alumina Ltd. “We are looking at further international expansion,” Kalban said, declining to provide details.

Also on Tuesday, Aluminium Bahrain said it had received approval from the Bahraini government for the gas allocation needed to support its planned sixth production line, which is expected to start operating in 2018.