Emirates Aluminium (Emal), the first company to set up in Abu Dhabi's new industrial zone in Taweelah, aims to double its sales in the UAE as the zone attracts more downstream industry.
Emal, a joint venture between Mubadala Development and Dubai Aluminum (Dubal), currently sells close to 100,000 tonnes a year to domestic buyers.
New customers in the Khalifa Industrial Zone Abu Dhabi (Kizad) are expected to double this figure within two years.
Mubadala is a strategic investment company owned by the Abu Dhabi Government.
"Downstream industries are moving into Kizad, which will increase our percentage of sales in the region," said Saeed Fadhel Al Mazrooei, Emal's chief executive.
The company has already concluded supply agreements with two companies setting up shop in Kizad and is in discussions with another two, he added.
The 417 square kilometre Kizad is an integral part of Abu Dhabi's ambition to promote industrialisation as one aspect of the economic diversification of the emirate.
The company is also set to more than double its exports to the United States this year.
Sales to the US will increase to 250,000 tonnes from 100,000 this year, said Mr Al Mazrooei.
Emal is presently adding another 550,000 tonnes of production capacity to its 6 sq km smelter complex in Kizad, bringing its output to 1.3 million tonnes per year by 2014.
The production of aluminium is highly energy intensive and the availability of cheap natural gas for use in power generation is regarded as a major competitive advantage for Gulf players.
But while GCC governments have managed to allocate gas to their industries, the region is facing a looming gas shortage that threatens to undermine industrial growth.
The advent of nuclear power will help to avert an energy crunch. Abu Dhabi is preparing to build four nuclear reactors at a cost of US$20 billion (Dh73.46bn), the first of which is due to come online in 2017.
"We are waiting for the nuclear plant to come online, that will change the equation," said Mr Al Mazrooei.
He said he was unconcerned about competition arising from other ventures in the Middle East, and forecast a growing market for Emal's product.
Its parent company Dubal is already producing more than 1 million tonnes of aluminium in Jebel Ali.
In Saudi Arabia's Ras Az Zawr industrial cluster, the state-owned miner Ma'aden has teamed up with the aluminium giant Alcoa to create the Ma'aden Aluminium Company. A 750,000 tonnes a year production complex is under construction.
In Oman, Rio Tinto Alcan holds a stake in the Sohar aluminium smelter that produces 350,000 tonnes annually.
In spite of a recent dip in aluminium prices and global demand, analysts predict a rebound, with China forecast to further increase its use of the metal.
"We expect [aluminium] to strongly benefit from the wave of consumption upgrading, consumer goods spending and an increase in car sales over the next five years," said Roxana Mohammadian-Molina, a Chinese market analyst at Barclays Capital.
"Even if we grow together, we won't meet demand," said Mr Al Mazrooei.
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The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
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Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
THE SPECS
Cadillac XT6 2020 Premium Luxury
Engine: 3.6L V-6
Transmission: nine-speed automatic
Power: 310hp
Torque: 367Nm
Price: Dh280,000
Results
1. Mathieu van der Poel (NED) Alpecin-Fenix - 3:45:47
2. David Dekker (NED) Jumbo-Visma - same time
3. Michael Morkov (DEN) Deceuninck-QuickStep
4. Emils Liepins (LAT) Trek-Segafredo
5. Elia Viviani (ITA) Cofidis
6. Tadej Pogacar (SLO UAE Team Emirates
7. Anthony Roux (FRA) Groupama-FDJ
8. Chris Harper (AUS) Jumbo-Visma - 0:00:03
9. Joao Almeida (POR) Deceuninck-QuickStep
10. Fausto Masnada (ITA) Deceuninck-QuickStep