The document provides an analysis of the aluminum industry in the Middle East and North African region from 2010 to 2017. It finds that aluminum production has grown significantly, reaching 3.69 million metric tonnes in 2011. Major production hubs are located in Qatar, UAE, Oman, Bahrain and Saudi Arabia. The region has a growing downstream aluminum sector and significant planned expansions over the next 5 years are expected to further increase production. Challenges include volatility in aluminum prices and increased global competition.
The document provides an analysis of the aluminum industry in the Middle East and North African region from 2010 to 2017. It finds that aluminum production has grown significantly, reaching 3.69 million metric tonnes in 2011. Major production hubs are located in Qatar, UAE, Oman, Bahrain and Saudi Arabia. The region has a growing downstream aluminum sector and significant planned expansions over the next 5 years are expected to further increase production. Challenges include volatility in aluminum prices and increased global competition.
The document provides an analysis of the aluminum industry in the Middle East and North African region from 2010 to 2017. It finds that aluminum production has grown significantly, reaching 3.69 million metric tonnes in 2011. Major production hubs are located in Qatar, UAE, Oman, Bahrain and Saudi Arabia. The region has a growing downstream aluminum sector and significant planned expansions over the next 5 years are expected to further increase production. Challenges include volatility in aluminum prices and increased global competition.
The document provides an analysis of the aluminum industry in the Middle East and North African region from 2010 to 2017. It finds that aluminum production has grown significantly, reaching 3.69 million metric tonnes in 2011. Major production hubs are located in Qatar, UAE, Oman, Bahrain and Saudi Arabia. The region has a growing downstream aluminum sector and significant planned expansions over the next 5 years are expected to further increase production. Challenges include volatility in aluminum prices and increased global competition.
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SECTORAL ANALYSIS
A Global Growth Partnership Company
YEARLY SECTORAL ANALYSIS SECTOR: Aluminium Industry in the Middle East and North African (MENA) Region AUTHORED BY: Metals and Minerals Practice, Middle East, North Africa and South Asia, Frost & Sullivan 1. Market Overview The Middle East and North Africa (MENA) region traditionally has been a net exporter of the major portion of its production of primary Aluminium. There are no significant downstream development companies in the Middle East excluding extrusion, rods & conductor and a few rolling mills. Predominant end-user segments include construction followed by industrial and packaging. MENA countries, especially, in the Gulf Cooperation Council (GCC) region have significant power advantage as a result the aluminium downstream development is increasing at a rapid pace. GCC contributes in a big way to the primary aluminium growth in the MENA region. According to Frost & Sullivan, the total primary aluminium production in 2010 stood at 3.17 million metric tonnes (MT) and reached 3.69 million MT in 2011 at 16 per cent growth over 2010. The growth has primarily been due to Qatalum reaching full capacity of its first phase in 2011, after power outage issues in the second half of 2010, when production was halted resulting in losses. According to the Gulf Aluminium Council, the industrys investment in the region is US $40 billion and with a new smelter which will be fully integrated in Saudi Arabia named Maaden which is a Joint venture between Alcoa and Maaden being commissioned in 2013-14, in a phased manner, this project will add an additional US $1.5 billion. The Aluminium industry in GCC contributes 4-12 per cent to the regional GDP. The industry provided over 11,000 employment opportunities; supporting small and medium sized business added another 30,000 to this. The transformation of scrap into recycled aluminium alloys requires approximately 5 per cent of the energy input needed to produce primary aluminium from bauxite. This phenomenon is catching up in the MENA region; as a result many downstream aluminium players and primary Aluminium smelters are taking up greener initiatives to reduce their carbon footprints. It is expected that in the next 10 years the secondary aluminium market in the GCC would be a key contributor to the recycling Industry and will be creating employment opportunities.
SECTORAL ANALYSIS A Global Growth Partnership Company
Chart 1: Aluminium Dross Overview
Source: Frost & Sullivan Analysis
According to Frost & Sullivan, increased primary aluminium production will increase the opportunity of Dross recycling; total dross in MENA region was estimated at 72,000 MT in 2010 and is expected to double by 2017. Major smelters would expand through commissioning new plants along with increased sourcing tie ups with dross recyclers in the region and through overseas partnerships. Reduction of carbon footprint becomes inevitable in the large industrial sector where energy conservation is the need of the hour. 2. Key Drivers and Restraints Chart 2: Drivers and Restraints
Global Financial Volatility LME price fluctuations Chinese Imports and Spot fixing of prices
Source: Frost & Sullivan.
SECTORAL ANALYSIS A Global Growth Partnership Company
3. The CEOs Perspective of the Complex Business Universe Figure 1: Challenges and Opportunities in MENA Region (2011 2015) Key Parameters Global Opportunities Challenges Increased imports from China, India and the Far East Benchmarking Indian, European companies - lack of qualified local manpower Opportunities Export potential in import dependent countries and exports potential in emerging markets. Leveraging partnerships and Join Ventures (JV) with European aluminium manufacturers, e.g., JV with Alcoa, Hydro and Alcan, etc Major end users of Aluminium based products are looking at local procurement opportunities to reduce lead times and have long term local procurement contracts. Major Aluminium smelters commissioned - who are integrated in nature Hedging, economical procurement where ever necessary, secondary ingots, etc.,
Best Practices
End-user Perspective
Economical procurement coupled with cheaper raw material costs Increased competition - Integrated players may have a competitive edge over solely downstream competitors. Commodity prices of aluminium directly linked with the global economy and issues
Industry Convergence
Economic Impact
Competitive Analysis
Increased competition within MENA Branding and marketing exercises to and price wars. increase brand awareness
SECTORAL ANALYSIS A Global Growth Partnership Company
Chart 3: Impact of Challenges over the Long and Short terms: MENA Region
Source: Frost & Sullivan
4. Market Outlook: 4.1: Strategic Outlook for the year 2012: Growth of the primary Aluminium industry in the GCC will outperform the rest of the MENA region. Key GCC countries like the KSA, Qatar, Oman and UAE (Abu Dhabi) will have increased primary production either due to new commissioning of aluminium smelters or phase 2 expansions of their existing capacities.
SECTORAL ANALYSIS A Global Growth Partnership Company
Chart 4: Primary Aluminium Production in MENA:
Alba to add additional capacity of 330,000 MT Will double capacity in Phase 2 Upcoming Smelter in the KSA Phase 1 720 KTPA & Phase 2 1200 KTPA Due to Power Outage issues in Aug 2010, Production halted. Phase 2 expansion is delayed.
1000000 750000 500000 250000 0
950,000
870,000 750,000 720,000 585,000 360,000
Phase two of doubling the smelter capacity to 720,000
600,000* 320,000
Dubal (UAE)
Emal (UAE)
Maaden (KSA) (Scheduled)
Sohar Aluminium (Oman)
Source: Frost & Sullivan
Investments in the GCC Aluminium industry are currently estimated at around $30 billion and could reach as much as $55 billion by 2020 Emal started production of phase 1 in December 2009; with its second phase well underway it is expected to be fully operational by 2013 Sohar Aluminium is designed to produce ingots and supply liquid aluminium; it would double its capacity in phase 2 with higher focus on rolling slabs In the KSA, Maaden in JV with Alcoa is commissioning a smelter by 2013 with 720,000 MT; Phase 2 of Maaden would start production in 2015 with a combined production capacity of 1.2 Million MT Aluminium Bahrain (ALBA) is looking at the feasibility of adding one more pot line; plans to add 300,000 MT in the near term Emal is expected to reach its full production this year and would be looking at phase 2 capacity expansion of 1.4 Million MT by 2013-2014 Qatalum reached its 100 per cent capacity utilisation (585,000 MT) in September 2011 and would further ramp up its total capacity to 1.1 Million MT by 2015 Sohar Aluminium would expand its existing capacity to 360,000 MT and double its with rolling slab production by 2013-14
Egyptalum
Alba (Bahrain)
Quatalum (Qatar)
Iralco & others
SECTORAL ANALYSIS A Global Growth Partnership Company
4.2 Strategic Outlook for 2020 (Mega Trends) Chart 5: Potential Downstream Opportunities in MENA
Source: Frost & Sullivan
5. Overall Strategic Conclusion The Aluminium industry in the MENA region is expected to grow in the short and medium terms (2 to 5 years) provided the primary aluminium smelting capacities are commissioned, as per plan. The Aluminium downstream industries will have a great scope to localize products which are currently imported from a few regular import partners. The ability to deal with constant fluctuations in LME prices of aluminium would be the great challenge going forward, along with the economics of scale, regular supply of feedstock and environmental issues. The substitution threat of Aluminium from various metals and materials will continue but may not be a huge threat, as major plastic and metal companies are investing in research and development inclined on weight reduction strategies including automotive, industrial applications, refrigeration and chillers, etc. Key countries in GCC region where Aluminium downstream development would increase are KSA, UAE, Oman and Qatar there are surging investments backed by Aluminium smelters and Family Investment groups in the Middle East.
SECTORAL ANALYSIS A Global Growth Partnership Company
Key end-user segments in the MENA region would contribute significantly to macro and micro growth are Construction, electrical, packaging and industrial based applications which are expected to play a significant role during the forecast period.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-inclass positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com For more information contact: Contact: Deepshri Iyer Corporate Communications Middle East and North Africa P: +91 22 6607 2038 F: +91 22 2832 4713 E: [email protected] Tanu Chopra Corporate Communications Middle East and North Africa P: +91 22 6607 2037 F: +91 22 2832 4713 E: [email protected] Nimisha Iyer Corporate Communications Middle East, North Africa and South Asia P: +91 98200 50519 F: +91 22 2832 4713 E: [email protected] http://www.frost.com
