Emal says smelter project is not affected by global recession

The Emirates Aluminium company (Emal) said yesterday it is pushing ahead with the construction of the world’s largest single site smelter despite the global financial distress and a decline in aluminium prices. The Abu Dhabi-based company would start production in 2010 and it has already struck some business deals with clients, said Emal CEO Duncan Hedditch. “When you prepare to put together an investment of this scale you create a business plan with a very long-term view of costs, revenues and markets. And it is important that it makes sense over the long term,” he said in an interview with Oxford Business Group, sent to Emirates Business. “So although the markets are not as good as they were last year, it is in many respects irrelevant to us now. Especially taking into account that we are not currently in production – then it is truly irrelevant in terms of revenue. In short, the question should be does your business plan still hold up in the current climate? The answer to this is, ‘yes it does’, and the recent downturn has not affected our plans going forward.” Hedditch said lower aluminium prices had not affected Emal’s strategy. The company views 2010 as a “small production year” as it is the first year of production and full capacity will be reached at the end of 2010, he added. “However, we have already seen significant interest from customers that we would like to work with. In fact, we have actually done some business already in terms of long-term business with customers that we are very pleased to have on our books,” he said. Emal was established in 2007 as a join venture between Dubai’s Dubal Aluminium Company and the Abu Dhabi-based Mubadala Development Company. The $5.7 billion (Dh20.9bn) project is the world’s largest green-field aluminium smelter and the biggest non-oil industrial venture in the UAE. The first phase of the Emal project will be operational in 2010 with about 700,000 tonnes annual capacity. Upon completion of all phases, the smelter will have an output capacity of nearly1.4 million tonnes. Hedditch was asked how the creation of such a giant industrial venture would encourage the development of small and medium-sized enterprises and support Abu Dhabi’s economic diversification plans. “In other communities where I have worked in this industry, for every direct hire job in the smelter – depending on the manning strategy of the smelter and the capability of the region – you had between four and eight jobs generated in the community supporting the smelter,” he said. “For starters, you have the work associated with the logistics and delivery of materials and transportation of products, and so on. Additionally, you have a lot of employment created with minor operating supplies, such as safety equipment.” He said many jobs would also be created by maintenance and engineering contracts to be awarded in association with that project. “We will have our own capability for this, but we will always outsource for the peaks and troughs. There is also a whole lot of infrastructure required for training and development – some of this already exists but we will be leaning on the universities to support our needs. “An industry like this is very much a foundation sector for further development. If there are existing small businesses, they will surely grow and if there are new small businesses that were set up to service us then they will expand and seek other customers, thus expanding further. So, by the creation of this industry, you start to add a lot of layers and depth to the economy.” source:www.business24-7.ae