Emal gets approval for $4.5bn smelter plan

A US$4.5 billion expansion plan by Emirates Aluminium (Emal) has been given the go-ahead, creating one of the world's largest single-site producers of primary aluminium.

The second phase of Emirates Aluminium's expansion will almost double its production capacity to 1.3 million tonnes.

Emirates Aluminium is to become one of the largest single-site producers of aluminium in the world after a multibillion-dollar expansion plan was approved.

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The US$4.5 billion (Dh16.52bn) second phase of the smelter project will almost double the production capacity of Emirates Aluminium (Emal) to 1.3 million tonnes. The expansion will go ahead now that approval by the company's board of directors had been secured, it said yesterday.

"This is a very significant moment for Emal and the UAE," said Saaed Fadhel Al Mazrooei, the president and chief executive of Emal. "Phase two will equip Emal to grow the global customer base we have already established. It is also a clear demonstration of the confidence we have in the future market for aluminium and in Emal to deliver to our customers."

Based in Al Taweelah in Abu Dhabi, Emal has emerged in recent years as a key part of the emirate's plan to diversify its economy away from hydrocarbons. Production of aluminium, along with semiconductor manufacturing, aerospace and property, has grown into an important plank in the Abu Dhabi 2030 Economic Vision.

Emal is 50 per cent owned by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, with the remaining stake held by Dubai Aluminium (Dubal).

It currently produces 750,000 tonnes of aluminium every year but has always had the capacity to expand from its site in the Khalifa Industrial Zone Abu Dhabi (Kizad).

China, India and other fast-growing developing markets have been spurring demand for the metal since the global recession, pushing up prices.

But weakness in North American and European markets has contributed to a 12 per cent softening in prices since May 3. The London Metal Exchange three-month aluminium price was $2,503 per tonne on Friday.

Nonetheless, analysts forecast prices to remain strong long-term, driven by increasing use in everything from cars to construction, especially in emerging markets.

Emal's expansion will involve building a new potline of 444 electrolytic cells used to reduce metals from fused salts, powered by increasing the on-site power plant capacity to 3,000 megawatts. It will create an additional annual production capacity of 520,000 metric tonnes.

Special technology developed by Dubal will be installed in the potline, enabling energy-efficiency and environmental protection benefits, Emal said.

The same technology will also be installed in the first phase of the project, boosting the production yield from the existing 756 cells by 50,000 tonnes a year to 800,000 tonnes by the end of next year.

It will raise Emal's total production capacity to about 1.3 million tonnes by the end of 2014.

In a bid to create one of the world's biggest smelting groups, Dubal and Mubadala are in talks to create a company to manage all of the UAE's aluminium assets. The deal may involve Mubadala taking a stake in Dubal, which is fully owned by the Dubai Government.

Dubal and Mubadala are already members of a consortium developing a bauxite mine in Guinea, home to the world's largest-known reserves of the base mineral for aluminium.

Emal started operations in December 2009 and produced 336,000 tonnes of aluminium during its first year, 100,000 tonnes more than planned.

Recently Emal has been seeking to kick-start the development of a complete aluminium supply chain within Kizad. Abu Dhabi Basic Industries (Adbic) signed a $200 million joint venture with Gulf Extrusions in May to form the Taweelah Aluminium Extrusion Company. The new company will process aluminium from Emal and sell the finished products to the open market.

Aluminium production is extremely energy intensive, and investors are increasingly choosing to locate new smelters close to abundant, cheap energy sources.