The downstream aluminium industry in the GCC region is undeveloped and therefore ripe for investment, a new publication issued by Deloitte Middle East points out.
An estimated 20 per cent of locally produced primary aluminium is consumed within the GCC and 50 per cent of locally utilised aluminum is processed further in secondary production and exported to international markets, it observed.
The Deloitte publication titled “GCC-Tomorrow’s aluminium powerhouse” also highlights there is a significant opportunity to develop the aluminium recycling activity in the region. The cost advantages for industrial activity in the region coupled with increasing support and encouragement for investment in downstream aluminium operations create an attractive opportunity for investment.
“Although the regional aluminium industry is not without its challenges, its close proximity to end-user markets both throughout the Middle East and Europe is a strong advantage,” said Firas Eid, consulting partner at Deloitte Middle East. “Additionally, strong economic growth across the GCC, particularly in aluminium-intensive industries, the most notable of which is construction, will further fuel the region’s growth in aluminum production and solidify the region as a global leader and pioneer in the industry.”
A regional powerhouse
The publication said the GCC region was poised to become a primary aluminium production powerhouse, contributing over 13 per cent of the world’s output by 2013.
The five smelters existing in the GCC area today have a combined production capacity of just under 3.6 million tonnes and contributed 7 per cent to global output in 2010, Deloitte said.
The Maaden smelter in Saudi Arabia is set to become operational by 2013 and Emal is going through a robust expansion, developments that will help boost the region’s share of world’ output.
“Given the affordability of power and labour in the GCC region, the local aluminium industry as a whole is conducive to investment,” said Mahmood Daylami, secretary general of the Gulf Aluminium Council (GAC). “Increasing costs is becoming critical for more and more primary producers around the globe, and therefore the Gulf presents a viable and attractive venue for investment in aluminum production across the entire industry’s value chain. Furthermore, the GCC smelters are evaluating and studying future expansion plans to increase their global production contribution to a cumulative capacity estimated at 7 million tonnes per annum by 2020.”
