Aluminium Bahrain (Alba) is the kingdom’s pride, one of the pillars of modern Bahrain.

The high reputation the company enjoys in the world market brings with it recognition for the country and its people.
In the global marketplace, when enquiries are made about Bahrain, Alba stands out. It speaks for what the Kingdom is and what it can achieve.
“Alba is one of the biggest smelters in the western world. It has the best technology and one of the lowest conversion costs. Above all, 90 per cent of its workforce is local,” says Bruce Hall, the chief executive of Alba, in an exclusive interview with Gulf Industry.
“We have an educated workforce, a track record of being able to make use of $1.7 billion of borrowed money at low risk and give good returns to investors and bankers.’’
These strengths make investors sit up and take note of the country.
To sustain this global standing and reap benefits from that, it’s imperative that Alba continues to be a force in the international aluminium market.
Alba’s market evolution in the last few years has seen a gradual tilt towards domestic supply and decrease in exports.
Hall feels that Alba should maintain a balance between domestic supply and exports despite increasing pressure from the kingdom’s downstream industries for more feedstock.
“My personal view is that it is detrimental to the interests of the company and the country not to be in the export market,’’ he adds. “The export market puts Alba on the world stage. Alba being there means Bahrain is on the world stage. It also increases the company’s competitiveness,’’ he says.
“When we become a domestic supplier only, we become introverted and we don’t have the world focus and in turn run the risk of losing that sense of international competitiveness.’’
Alba currently produces 520,000 tonnes per year of aluminium and 53 per cent of this goes to the local market, while 13 per cent is sold in the GCC. The remainder is exported to other countries with the main focus being the Far East. Alba is the biggest supplier of aluminium to Taiwan.
Alba’s Potline 5 expansion, set to become operational in March, will add 310,000 tonnes to its capacity and provide an opportunity for the company to increase its exports.
“All downstream industries are seeking more aluminium and there will be a marginal increase in the supply to them. We will also see a big increase in exports following the start up of Line 5,” says Hall.
He says Alba is keen to support the development of local industries. “If our expansion facilitates development of local industry, we will be very pleased.’’
The Bahrain Government, a major shareholder in Alba, has taken a strategic decision to develop the country’s downstream industries.
“Probably we can generate more revenue for Alba by exporting metal than by selling it domestically. But selling it to the domestic market means more Bahrainis are employed and in turn it increases the economic stimuli,’’ he continues.
“However, when we export, we earn more money and increase the income for the country. Hence it’s essential to strike a balance between exports and domestic supply,” he adds.
Hall admits that the supply situation for Bahrain’s domestic industries will continue to be tight in 2005 since Potline 5 will fully be operational only in June this year. However, 2006 will see more balanced supply to the local industries.
On Alba’s ability to supply feedstock to future industries, he says: “Though the expansion projects of the existing units will have enough supplies, we will have a dilemma if new industries that need huge feedstock are set up. Our policy is to maintain a serious quantity of export.’’
Hall believes that the solution lies in the development of Potline 6 which will add another 320,000 tonnes per year capacity.
“All essential elements for the project are in place, including the licence to operate and space. The return on investment will be excellent. The only stumbling block is gas supply,” he says.
“I believe that there would be a strong appetite for Potline 6 as soon as there is a green signal for import of gas. If energy is not an issue, it will be the best smelter project built in the Gulf.”
However, Alba still has no time-frame for a decision on the project. The talk of Potline 6 has been internal and the board has not officially discussed the project yet, says Hall. 
A key issue facing the company is the demand for supply of aluminium at subsidised prices for the local industries as the price of the raw material has sky-rocketed.
Hall sees this demand as detrimental to the development of a strong industrial sector.
“I don’t agree that subsidising the industries is a good policy. It is a false economy to be generating employment by subsiding units that will not be existing without Alba.
“The downstream should have demonstrable capacity to compete in the open market. If Alba has a problem and the units have to buy raw materials from outside paying the transport costs and they can still survive, that’s good. Then we know that we have a viable industrial sector,’’ Hall says.
Speaking on the price situation in the aluminium market, the CEO says in the long term an average price of around $1450 to $1550 per tonne would be an ideal price band.
“Though we would not make much money, we would give confidence to the consumer. The worst thing you can offer your customer is a feedstock price which is oscillating 50 to 60 per cent. The end consumers don’t know about the cost fluctuation of the raw material, they know about the cost of the product they buy. And if it is too expensive they won’t buy.
“The commodity market is out of control at the moment including that of our competing materials such as steel and plastics. This is not good for anybody and is not sustainable. The market is likely to see an over correction soon,’’ he predicts.
In the last year, there have been reports of aluminium giant Alcoa planning to buy Bahrain government’s stake in Alba. 
However, Hall says that at present there are no discussions between Alcoa and the government. “But we have read a Reuter report saying that Bahrain has sent an ‘expression of interest’ invitation to major firms to buy its stake in Alba.
 “I have always favoured the Bahrain government’s reducing its equity exposure to Alba. But by doing so, it can reinvest the equity in the upstream aluminum industry such as another smelter or alumina refinery.”
Alba needs 1.6 million tonnes of alumina per year. “Any upstream investment aimed at a secured supply of the commodity will be good for Alba,’’ says Hall.
He also suggests that Bahrain and Alba could invest overseas to generate more income for the country.
“Dubal had a go at trying to invest in the smelter in Qatar. Why not Bahrain? Why not Alba? It’s just outside our doorstep. We can also invest in countries like Malaysia with whom we have a lot of synergy,” he says.