Production at Bahrain Atomisers International, which makes aluminium powders and pellets for use in a range of industries, climbed a mere 10 per cent in 2011, the company reported.

Adverse market conditions stemming from the Euro zone debt crisis and sluggish economic growth in many countries as well as issues relating to the purity level meant the company could not export higher volumes, Bahrain Atomisers general manager Tim McLaughlin told Gulf Industry. Other characteristics were higher aluminium raw material prices and a fall in demand for premium grades. Production in 2011 was approximately 8,000 tonnes, 85 per cent of which was powders.

Sales were in excess of $20 million, but lower than the 2010 turnover when a volume of 7,230 tonnes was snapped up by markets.

Product purity was one of the areas the company had to struggle with. Until two years ago it offered 99.9 per cent purity in its powders and pellets but Alba, the source of Bahrain Atomisers’ raw material, is now producing liquid metal at a reduced purity level of 99.7 per cent. “This affected our markets. We’ve lost 1,200 tonnes in sales over the past 15 months,” said McLaughlin.

A facility of Bahrain Atomisers in Askar, near Alba’s plant

Bahrain Atomisers has capacity to produce larger volumes but cannot do so because of market constraints. Three to four years ago, for example, silver-colour cars enjoyed strong demand which meant there would also be demand for the aluminium powder that went into the pigments. But since then the fashion trend has moved away from silver, consequently reducing demand for aluminium powders. Cars are among several items, including electronic goods, which are increasingly coming in shades other than silver.

Focus on US market

To avoid a downturn, Bahrain Atomisers adopted a strategy of penetration in markets where scope existed for growth of its business. The US, already an importer of the company’s products, was identified as such a market and greater attention was paid towards developing sales there.  As a result, the US now commands 25 to 30 per cent of the company’s global sales against 15 per cent three years ago. However the share of the European and Japanese markets has fallen. Bahrain Atomisers also exports to Australia. Virtually none of the production is consumed within the Gulf region. But that could change as several chemical companies, mainly in Saudi Arabia, which had greenfield projects stalled in the wake of the global financial crisis that started in 2008, will likely materialise in 2012 or 2013. “If 100 per cent of the stalled projects begin and we capture 100 per cent of the supply, our production would need to double,” said McLaughlin. The powder will be used as an additive in the chemical facilities’ production processes.

Coarse aluminium powder made by Bahrain Atomisers

In 2012, Bahrain Atomisers will be looking at greater consolidation of markets. Higher sales volumes may not translate into higher returns. “To improve your position you may have to sell a lower volume that fetches a higher price. Much depends on what we’re manufacturing in terms of the product mix and key to boosting profits is selling across the entire product range,” commented McLaughlin. That may not always happen. Currently, the superfine grade is highly depressed because of the crash in the solar cell market. Bahrain Atomisers is still producing superfine but in very low quantities. So focus has lifted from that grade.

Diversification not feasible

There is also no question of diversification now. The company had indicated in 2008 it could be interested in making powder flakes similar to what Ecka Granules, the German parent company at the time, was making in other places. Now that seems unlikely as several companies in India are making flakes at a cheaper price and in fact one of them plans to build a plant in the Gulf.

Bahrain Atomisers, which was owned 51 per cent by Bahrain Development Bank and 49 per cent by Ecka Granules, has had its ownership pattern changed and Ecka Granules now owns all of the company. The Ecka Granules holding company’s material assets were recently acquired by Platinum Equity. The acquisition included Ecka Granules’ copper, aluminium and magnesium powder manufacturing plants and sales offices. Covered under the buyout were Ecka Granules assets in Bahrain, Australia, Austria, China, Germany, Slovenia, Switzerland, the UK and the US.