Midal Cables has expanded capacity to become the world’s largest producer of aluminium rods and conductors, but is battling subsidised overseas companies for a share of contracts for overhead transmission lines.

“We face a lot of competition from countries who get export incentives of around 20 per cent or more,” said Midal Cables chief executive Salman Al Shaikh.  The official hastened to say he was speaking for a handful of companies in the region that made the same product and faced the same predicament.
Midal Cables’ capacity has been yanked up to 120,000 tonnes per year (tpy) from 90,000 tpy, the new capacity taking effect in January 2006.  All of Midal’s production is exported and with margins being low, the company has to go in for higher production to boost turnover.
Some of its customers are competitors as they buy from it aluminium rods to produce conductors for overhead transmission lines. Midal sells some rods as a semi-finished product and also makes conductors for overhead transmission lines form other rods. In 2004, Midal produced 70,000 tonnes, of which 40,000 tonnes was in the from of rods and wires and the remainder of 30,000 tonnes in conductors for overhead transmission lines, In 2005, its total production was 80,000 tonnes, of which 40,000 was in conductors and the remainder in rods and wires including value-added production. The company uses a wide range of alloys for mechanical and electrical applications. Into the pure aluminium is added such elements as manganese, silicon and copper depending on what the market has demanded.
Work on a GCC grid begins late next year, and although the project’s requirement for overhead transmission lines is a mere 20,000 tonnes, Gulf manufacturers are keen to supply because, as Al Shaikh puts it, the grid is a   “strategic job” and a matter of pride for local companies.
“It will be difficult for Gulf firms to compete unless there’s protection,” commented the official, adding emissaries of the local industry had made several representations to the GCC committee overseeing work on the grid but to no avail. “The committee is bent on finishing the project as cheaply as possible. There used to be a 10 per cent tariff on imports, but this was waived for the interconnection. They’re doing this for people who enjoy subsidies and can bring down their prices, whilst our market is open. When we go there, there’s a 20 to 25 per cent barrier for our products. This is unfair competition.”
The grid committee’s tough stand is having a positive effect. The local industry is tightening its belt and learning to be more competitive. Just to stay in contention as suppliers, GCC producers will have to bring down their own prices and cut costs as much as possible. This would imply negotiating for lower prices for metal, drums and additives as well as shipping, and installing more efficient machinery and technology to produce more cheaply.
Midal, at least, is focusing on making special alloys and special conductors, from ideas developed through its own research activities. The aim is to sell better-performing cables for conductors and mechanical applications. In electrical applications, the aim would be to have better power-carrying capacity. The company is proud that it developed the “enhanced conductivity aluminium alloy rod” for the cable industry in the UK, and the extra-high conductivity aluminium alloy conductors of  59 per cent IACS for the Swedish National Electricity Utility which opened new growth markets in the 400 kV transmission network
Al Shaikh said innovation had put the company ahead and was the only way to maintain and consolidate its gains. “That’s the reality of the international market. But ours is a success story where both machines and people have played their part.”
The figures say it all. Despite the “squeeze” and the subsidies, Midal mustered $200 million in sales turnover in 2005 against $150 million in the previous year. It hopes to achieve $250 million in 2006.
The company exports its products to nearly 60 countries on five continents.  In 2004 there were large-scale supplies to the North African states of Algeria, Tunisia and Morocco, but in 2005 the scene shifted to the Arabian Gulf region thanks to greater investment in projects due to high oil prices.
Midal’s main raw material, molten aluminium, comes from Aluminium Bahrain (Alba). The company was successful in procuring its full requirement of 110,000 tonnes for 2006 against 80,000 tonnes in 2005.
The quality of electrical conductivity of Midal cables easily reaches international specifications because of the high-purity molten metal supplied to the company.  Midal’s alloy and EC rod used by cable manufacturers in many parts of the world is sold at a reasonable premium due to its quality and ease of drawing and its high conductivity. Midal Cables was the first in the Gulf to be awarded the ISO 9002 certification. Bureau Veritas Quality International certified that the quality management system of Midal Cables had been assessed and found to be continuously in accordance with the requirements of the quality standards BS EN ISO 9001:2000 for the following: manufacture of aluminium and alumium alloy wires and redraw rods for electrical and mechanical applications; aluminium, aluminium alloy and steel reinforced bars for overhead conductors for power transmission and distribution; continuous extruded products; aluminium clad steel wire and core and compacted conductors for power cables. The company’s environmental management system was certified under ISO 14001.
The company was formed in 1977 as a joint venture between Intersteel and Olex Cables and is now equally owned by Bahrain’s Al Zayani Investment and Saudi Cables Company, Jeddah. Midal’s associate companies are Aluminium Wheel Company WLL (Aluwheel) and Metal Form.