Gulf aluminium smelters have put expansion plans on hold because of the prevailing global economic recession which has seen aluminium prices substantially down compared to 2008.

Sohar Aluminium, Dubai Aluminium (Dubal) and Aluminium Bahrain (Alba) announced they would not go ahead for now with capacity upgrades while Alba said an important factor was the shortage of gas it needed for power generation.
The Bahrain smelter plans to boost its production capacity to 1.2 million tonnes per year. The company is currently operating at full capacity of 860,000 tonnes per year, said Musaad Abdullah al-Eid, general manager of marketing at Alba.
“There is a shortage of gas if we go ahead with the expansion plan,” Al-Eid told Reuters on the sidelines of an industry conference.
“Revenues have gone down and this is another factor that is making us think twice about expanding.”
Dubal also said a project it planned to be involved with in King Abdullah Economic City in Saudi Arabia was uncertain.
In April, Dubal held talks with the Saudi Investment Authority and Saudi mining company Maaden to discuss plans to build the plant in the economic city.
Oman’s Sohar Aluminium, part-owned by a unit of global miner Rio Tinto, has put the second phase of its plant on hold for now as the company assesses prospects for the metal, its chief executive said.
Sohar Aluminium, a $2.4 billion joint venture located in Oman’s Sohar Industrial Port, completed the first phase of the project in February and is operating at full production capacity of 360,000 tonnes per year.
“However with regards to our phase two expansion plans which will add another 360,000 tonnes to our capacity, we still don’t have a set timeline for that,” Sohar Aluminium chief executive Bruce Hall said.
“We just started operating at full capacity a few months back so we will wait and see how the market reacts,” he said.
Sohar Aluminium is a joint venture between Oman Oil Company, the Abu Dhabi Water and Electricity Authority and Rio Tinto Alcan, a unit of Rio Tinto.

Prices fall sharply
Like many commodities, the price of aluminium has fallen sharply in the global downturn. Since last year prices have dropped more than 50 per cent to around $1,450 per tonne from $3,300, Hall said.
“Let’s just say we are not going to be making the amount of revenue that we would have hoped for, but we have no plans to cut our production,” said Hall. He said individual shareholders had told him they wanted to go ahead with phase two.
Around 60 per cent of the existing plant’s production is used for downstream industries, while the remaining 40 per cent will be sold by Rio Tinto Alcan to markets in the Far East, Hall said.
“So we don’t really have a direct relationship with the consumers. All the production is sold as part of the Rio Tinto marketing monster,” he said.
Asked how the company aims to deal with new supply from within the region, Hall said: “At this point it’s just going to be the survival of the fittest, and I do expect a number of companies not only in the region but on a global level to cut production.”