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No investment, more efficiency, say GCC aluminium smelters

GCC aluminium ingots Bahrain Alamy via Reuters
Aluminium ingots outside a plant in Bahrain: production by aluminium smelters in the GCC increased by around 1.8 percent last year
  • Production grew 1.8% last year
  • No new expansion this year
  • Concentration on efficiency

Aluminium producers in the Gulf are not planning any fresh investments in 2025, despite a projected rise in global demand, an industry official said this week.

Production in the six Gulf Cooperation Council (GCC) countries grew by around 120,000 tonnes to reach a record high of nearly 6.45 million tonnes in 2024, said Mahmoud Al-Daylami, secretary general of the Dubai-based Gulf Aluminium Council.

Al-Daylami, quoted by the Saudi Arabic language daily Aleqtisadia on Tuesday, said last year’s output increase was a result of an improvement in smelter efficiency rather than expansions in production lines.

He said the focus of GCC aluminium companies in 2024 was on buying shares in local and global firms and floating some of their shares in regional stock markets.

“Production by aluminium smelters in the GCC increased by around 1.8 percent,” he said.

“I do not expect any new investments in expansions in the GCC smelters this year. Instead, they will concentrate on upgrading operational efficiency and performance, despite an expected 3 to 5 percent growth in global output.”

Al-Daylami’s figures showed global aluminium production reaching nearly 70 million tonnes, with GCC smelters producing around 9 percent of the total.

The GCC states were estimated in 2022 to have pumped nearly $58 billion into their aluminium industries, as part of the drive to diversify their oil-reliant economies.

The Gulf House for Studies and Publishing in London estimates that nearly 60 percent of the aluminium produced by the GCC smelters is exported to Japan, South Korea and other countries.

The Gulf Aluminium Council said the UAE, the second largest Arab economy, is the world’s fifth biggest aluminium producer, with annual output of nearly 2.7 million tonnes.

Bahrain is the second largest Arab producer after the UAE, with production exceeding 1.6 million tonnes last year. The remaining aluminium production comes from Saudi Arabia’s Maaden, Qatar’s Qatalum and Sohar in Oman.

“Aluminium projects in the GCC are highly feasible, as this industry is based on intensive consumption of energy, which is abundant in the region,” Gulf House said.

The regional industry was shocked earlier this month when it was confirmed that Aluminium Bahrain (Alba) and the Saudi Arabian Mining Company had ended talks over a merger.

Discussions had been taking place since last year and it had been hoped that a deal could be completed in the first quarter of 2025, according to Alba’s chief executive, Ali Al Baqali.

The Riyadh-based market analysis company Sico Research said in a note: “The sudden termination of discussions comes as a surprise, given that the deadline was extended to 2025 only recently.”

The price of aluminium, according to the London Metal Exchange, has hovered at around $2,640 a ton this year, an increase of around 20 percent in the past year.