Lower costs and environmental benefits are driving many companies in the Middle East and North Africa (Mena) region to transform scrap into recycled aluminium alloys, a Frost and Sullivan report says.

Such a transformation requires approximately 5 per cent of the energy input needed to produce primary aluminium from bauxite, it said. “This phenomenon is catching up in the Mena region; as a result many downstream aluminium players and primary aluminium smelters are taking up greener initiatives to reduce their carbon footprints,” said the report.
“It is expected that in the next 10 years the secondary aluminium market in the GCC region will be a key contributor to the recycling industry and create employment opportunities,” it added.

According to Frost & Sullivan, increased primary aluminium production will increase dross recycling opportunities. Total dross in the Mena region was estimated at 72,000 tonnes in 2010 and is expected to double by 2017. “Many smelters will expand through commissioning new plants along with increased sourcing tie-ups with dross recyclers in the region and through overseas partnerships. Reduction of the carbon footprint becomes inevitable in the large industrial sector where energy conservation is the need of the hour,” it said.

Primary aluminium production in the GCC region grew 16 per cent to 3.69 million tonnes in 2011 compared with the previous year, while investment in the industry was $40 billion and set to rise by another $1.5 billion once the Maaden project in Saudi Arabia was completed, the Frost & Sullivan analysis said.

GCC countries such as Saudi Arabia, Qatar, Oman and the UAE will have increased primary production either due to new commissioning of aluminum smelters or expansions of their existing capacities.

Growth in the regional output was primarily due to the reaching of full capacity by Qatalum Phase 1 in 2011 after power outages occurred in the second half of 2010 resulting in production being halted.

In presenting its strategic outlook for 2012, the report said key GCC states such as Saudi Arabia, Qatar, Oman and the UAE (Abu Dhabi) would have increased primary production either due to new commissioning of aluminium smelters or Phase 2 expansions of their existing capacities.

Big investments

Investments in the primary GCC aluminium industry is currently estimated at around $30 billion and could reach as much as $55 billion by 2020.

Emal started production of Phase 1 in December 2009. Its second phase is expected to be fully operational by 2013-14.with capacity of 1.4 million tonnes.

Sohar Aluminium is designed to produce ingots and supply liquid aluminium. It plans to double its capacity in Phase 2 with a higher focus on rolling slabs.

In Saudi Arabia, Maaden’s joint venture with Alcoa is commissioning a smelter by 2013 with 720,000 tonnes capacity. Phase 2 starts production in 2015 with a combined production capacity of 1.2 million tonnes.

Aluminium Bahrain is looking at the feasibility of adding one more potline and plans to add 400,000 tonnes in the near term.

Qatalum reached full capacity (585,000 tonnes) in September 2011 and would further ramp up its total capacity to 1.1 million tonnes by 2015.

The analysis also reported that the GCC aluminium industry provided over 11,000 employment opportunities while aluminium-linked small and medium-sized businesses contributed another 30,000 jobs.

The Mena region traditionally has been a net exporter of a major portion of its production of primary aluminum. There are no significant downstream development companies excluding those engaged in extrusion and rods and conductor production and a few rolling mills. Prominent end-user segments include construction followed by industrial and packaging. The Mena countries, especially the GCC region, have significant power advantages and, as a result, the aluminium downstream development is increasing at a rapid pace.

Meanwhile, Emal’s chief executive Saeed Fadhel Mazrouei told a forum of UAE and German businessmen that the smelter plans to invest $3.8 billion for its Phase 2 development as it ramps up production to become the single largest greenfield smelter in the world.

The first phase investment was $5.7 billion, he said.

German companies are actively involved in building Emal’s facilities with 23 of them securing contracts worth $243 million in the first phase. In the second phase, German companies have already bagged contracts worth $184 million.

Emal has received loan facilities of $220 million from the German Export Credit agency, Mazrouei said.