Putting aluminium at the heart of the Gulf economy
Thursday, Sep 10, 2009
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Despite the fall in aluminium prices on the global commodities markets over the past 12 months, building an integrated aluminium industry makes good sense for the Gulf’s governments. With the advantage of cheap natural gas feedstock and excellent port facilities for exporting, there are significant opportunities for Gulf companies to increase the region’s share of the world’s primary aluminium production, which currently stands at 5.3 per cent.
For European and US aluminium giants, entering into joint ventures to build smelters with Gulf producers is an opportunity to reduce costs. For the region’s governments, investing in an aluminium industry fits in with the long-term industrialisation strategies that are being implemented across the region to create a more diversified economy, together with creating employment opportunities for nationals.
That is why governments across the Gulf are investing heavily to expand their aluminium industries, both upstream and downstream. By 2020, the GCC region is predicted to produce 10 million tonnes a year of the metal, but not all of this output will be for export. The development of industrial hubs around the region’s smelters will also drive the expansion of the Gulf’s downstream aluminium sector.
In this special supplement, MEED looks at the long-term potential for the region’s aluminium industry. It also addresses the short-term challenges, particularly how the sharp drop in demand for aluminium is affecting the region’s capacity expansion projects. The report examines worldwide aluminium prices, and supply and demand statistics for Gulf aluminium.
The supplement is built around a series of country reports, analysing the state of the aluminium industries in the key GCC markets, and comparing the countries’ different business models.
Aluminium is now a key sector of the regional economy and offers enormous opportunities for both the public and private sector. But global commodities markets are characterised by extreme cycles in supply and demand, so governments across the region need to remain focused on their long-term objectives if they are to deliver their visions.