General Electric clinches $500m deal to power Emal smelter

Expansion at the Khalifa Industrial Zone Abu Dhabi will boost output by 550,000 tonnes per year.

General Electric has been awarded contracts worth US$500 million (Dh1.83 billion) to power Emirates Aluminium's (Emal's) expansion in the Khalifa Industrial Zone Abu Dhabi, known as Kizad.

Emal is constructing a new smelter at its Kizad site that will boost its output by 550,000 to 1.3m tonnes per year by mid-2014.

GE will supply gas and steam turbines to South Korean building contractor Samsung C&T for the captive power plant that will provide Emal’s second smelter with electricity. It will also retrofit the existing plant to boost its energy efficiency and provide maintenance services for 15 years.

“A reliable and efficient supply of power is key to the success of our mission, as electricity accounts for a significant portion of the cost of producing aluminium,” said Saeed Fadhel Al Mazrooei, the Emal president and chief executive.

The 1,000 megawatt power plant, slated for completion in the third quarter of this year, will boost Emal’s total generation capacity to 3,000MW. The smelter is projected to be operational by the second quarter of next year.

Emal is a joint venture between Mubadala, a strategic investment company owned by the Abu Dhabi Government, and Dubai Aluminium (Dubal).

The expansion  will turn the company into one of the largest producers of aluminium in the Arabian Gulf.

Emal is facing stiff competition from smelters across the region, as traditional oil producers are seeking to diversify their economies from hydrocarbons. The massive Kizad in Taweelah is the result of Abu Dhabi’s efforts to build its industrial capacity.

In Saudi Arabia, the state-owned miner Maaden and aluminium giant Alcoa are building a smelter capable of an output of 750,000 tonnes per year. Bahrain and Oman also have significant  smelters.

Turbine producers such as GE have seen their equipment increasingly in demand with industrial clients such as aluminum manufacturers.

“It’s a continuation of a trend that we see growing,” said Mohammed Mohaisen, the general manager for thermal products and power generation for GE in the Middle East.

Emal sees a market for its added output in the growing industrial base at Kizad, Mr Al Mazrooei told The National in an interview last year. He also believes the company will double its sales in the United States to 200,000 tonnes per year.

Analysts see an increasing global production overhang in 2013, which is partially offset by financial investors who buy and hold the metal.

Gulf producers enjoy a competitive advantage because of their access to cheap natural gas, the feedstock used in their captive power plants. But the spiraling demand for electricity in the region is putting a strain of the domestic gas supply.

“Energy efficiency means making more metal with less fuel,” said Mr Mohaisen.