Global energy transition will boost long-term demand for aluminium, EGA says

Emirates Global Aluminium expects to be 'competitive' for rest of year after reporting a profit of $544m for the first half of 2023

EGA, one of the world’s largest aluminium producers, has smelters in Abu Dhabi and Dubai. Photo: EGA

Emirates Global Aluminium, the UAE’s largest industrial company outside the oil and gas sector, expects to be “competitive” in the second half of the year and said the global energy transition will boost demand for the metal in the long term.

The demand for aluminium, widely used to build solar panels and wind turbines, is projected to grow by 46 million tonnes globally by 2040, Zouhir Regragui, the chief financial officer of EGA, told The National.

“Although the markets are lower than the record highs from last year, we believe in the future of aluminium. The demand for aluminium will increase and, in particular, the role of recycled aluminium will grow,” Mr Regragui said.

“We are very well placed to capitalise on these opportunities for a number of reasons.”

EGA reported a profit of Dh2 billion ($544 million) for the first half of 2023 on revenue of Dh14.8 billion.

Prices of commodities, including aluminium, rose sharply in 2021. The momentum continued last year, exacerbated by Russia's military offensive in Ukraine, with aluminium hitting a decade-high.

However, aluminium prices on the London Metal Exchange have fallen about 17 per cent since reaching a peak of $2,650 a tonne in January this year, mostly due to economic weakness in Europe and the US, as well as a property sector slump in China.

EGA’s average realised price for the half-year period stood at $2,359 a tonne.

The company reported adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of Dh4.2 billion.

EGA’s sales of cast metal increased to 1.32 million tonnes, up from 1.31 million tonnes in the first half of 2022.

Bauxite exports from EGA's Guinea operations rose by about 6 per cent to 6.87 million tonnes.

“We are forecasting further demand in the future, but the infrastructure in Guinea needs to be enhanced in order to cater [to] all the demands. We are working with the [Guinea] government at the moment on how we can do it and benefit both sides,” Abdulnasser Bin Kalban, chief executive of EGA, told The National.

EGA continued its deleveraging strategy and made a corporate debt prepayment of Dh2.9 billion during the first half of the year. The company has prepaid Dh9.4 billion in total since mid-2021.

EGA's outstanding corporate debt currently stands at Dh14.4 billion.

In June, EGA signed agreements that could lead to industrial investments in the UAE worth more than Dh1 billion.

The preliminary agreements were signed with Sunstone, the largest producer of carbon anodes in China, and VCI, an Indian disinfectant and carbo-chemicals producer, at the Make it in the Emirates forum in Abu Dhabi.

EGA, one of the world’s largest aluminium producers, has smelters in Abu Dhabi and Dubai, an alumina refinery in Abu Dhabi and a bauxite mine in Guinea.

It is jointly owned by Abu Dhabi sovereign wealth fund Mubadala Investment Company and the Investment Corporation of Dubai.

The UAE is the fifth-largest aluminium-producing country in the world. EGA’s aluminium is the biggest made-in-the-UAE export after oil and gas and is shipped to more than 50 countries.

The aluminium sector accounts for about 1.4 per cent of the UAE's economy, according to EGA.