Aluminium Bahrain (Alba) is gearing itself for “a very difficult year” fuelled by continuing low aluminium prices as it makes progress in its Line 6 expansion project which is likely to spur the national downstream industry, already one of the most vibrant in the Middle East.

The forecast for a challenging year was made by the 2016 Annual Operating Plan and cited by the company’s chairman, Sheikh Daij bin Salman Al Khalifa, at a meeting of the company’s board.

Having touched on the outlook for 2016, Sheikh Daij remarked: “We look forward to growth in the aluminium industry and will continue to streamline our operational costs.”

The company had earlier reported a sharp drop of 70 per cent in the net income for Q3 2015 with sales down 17 per cent year on year due to lower LME prices. Net income for the third quarter had slumped to BD8.7 million ($23 million) versus BD29.5 million for the same quarter in 2014. For the first three quarters of 2015, the LME cash average was at around $1,590 per tonne with LME ranging per tonne between $1,486 on August 24 (lowest since July 2009) and $1,693 on July 2.

Alba, like other smelters, is caught up in the interplay of diverse market factors and its best recourse is to tighten its belt, increase operational performance and stay competitive, which it has vowed to do.

Among its top priorities for 2015 were safety, training and development, delivering on the Project Titan target, keeping a sustained focus on value-added sales, increasing creep-up capacity with minimal capital investment and pursuing the Line 6 Expansion Project.

The company is confident it will meet the objectives of Project Titan, a two-year efficiency programme for reducing cash cost by $150 per tonne by the end of January 2016.

Sheikh Daij: lifetime achievements honoured

Line 6, expected to begin production by early 2019, will boost annual production by 514,000 tonnes, bringing total output capacity to around 1.450 million tonnes.

Bechtel Canada completed the Bankable Feasibility study for the $3.5 billion project in December 2014.

DX+ Technology has been selected as the base for the expansion, while J.P. Morgan, Gulf International Bank and National Bank of Bahrain are the financial advisors.

Alba says the expansion will enhance the downstream industry by creating many co-investment opportunities through local and foreign aluminium investments. It will create hundreds of jobs, directly and indirectly, which will be a significant economic boost for Bahrain.

A challenge for Alba will be to meet the downstream’s requirements in terms of volume, type of metal and pricing.

COOPERATION AND SUPPORT

With global market conditions being what they are, cooperation between the Gulf’s smelters, which include some of the world’s largest, is what one would expect. An example of this happening was a high-level meeting between Saudi Arabian Mining Company (Maa’den) and Alba at the latter’s premises.

Ma’aden’s chairman Abdullah Al Saif and president Abdulaziz Al Harbi held discussions with Alba’s chairman Sheikh Daij, chief executive Tim Murray and other senior officials. An Alba statement said after the meeting: “The visit was to build upon existing relations between the two smelters and share information on ways to work together towards a successful future in the aluminium sector.”

Commented Sheikh Daij: “As two of the top aluminium smelters in the world, Ma’aden and Alba share a strong relationship. We appreciate Ma’aden’s unending support towards Alba, and look forward to continue working together in the future in order to address various challenges and opportunities that face the aluminium industry.”

In the context of the aluminium industry’s travails, a meeting of the Gulf Aluminium Council held in Dubai assumed special interest. Held in late November, it was called to review challenges and strategy with chief executive Murray, chief finance officer Ali Al Baqali and chief marketing officer Khalid Abdul Latif representing Alba.

Murray was a key note speaker and made his presentation on the financial aspects of the industry.

Issues covered included the aluminium smelter economic outlook, comparison of operating and capital costs in the Gulf region versus global, the importance of cost reduction as well as the impact of recent economic conditions on the aluminium business.

“I am happy to say that Alba has been able to maintain a good performance in a challenging market and we intend to continue to seek opportunities to capitalise on the potentials for a brighter future,” Murray told the gathering.

Murray: pursuing growth

In light of Alba’s pledge to help support the downstream, officials of the company met with a delegation from Midal Cables. The smelter’s chief operations officer, Isa Al Ansari, said: “As two of the leading industrial companies in Bahrain, Alba shares a longstanding relation with Midal Cables and we are pleased to meet their guests. This visit affirms our continuing commitment to supporting and strengthening our customer base. It was an ideal opportunity for us to introduce the delegates to the Alba smelter and highlight our operations as well as systems which we have in place for safety and environment.”

The Midal team was briefed about Alba’s contribution to the national economy, its production processes, environmental and safety policies and employee development and training programmes.

Alba’s presence at key events including trade fairs is actively sought. The company was a key participant and sponsor of the 2nd Energy Management Conference & Exhibition that was held from December 6 to 8 at Gulf Hotel, Manama.

It is a leading platform for key energy consumers, producers and investors in the region for the sharing of best practices. Topics tackled included energy efficiency, renewable energies, the private sector and climate change.

Speaking about his company’s support, Murray remarked: “Alba is continually focussed on operational efficiency and is proud to have achieved self-sufficiency in meeting its extensive energy requirement.”

HONOURED

Even as the gloomy prognostications for 2016 were made, Alba was lifted by the Lifetime Achievement Award granted by the Middle East Business Leaders Awards (MEBLSA) 2015 to Sheikh Daij. He was honoured for his exemplary leadership and immense contribution towards business transformation
creativity.