Aluminium extrusion firms to benefit from GCC railway

Gulf News reported that the GCC railway project has the region's Aluminum extrusion companies rubbing their hands in glee at the thought of the lucrative business potentially coming their way, given the relatively infant downstream industry in the Gulf.

Industry insiders said that the main body of train wagons and stations is made of Aluminum a single train compartment is made of 7 tonnes of Aluminum.

Mr Madar Al Mekdad GM of Gulf Extrusions said that "We will be involved with GCC rail and dealing with the train manufacturers. They should insist on using local companies. Political unrest in the region, a natural disaster in Japan and construction sector weakness in Dubai have taken their toll on the Gulf's Aluminum industry. Demand for Aluminum extrusions will grow but only 2% to 3% per year. Projects in Qatar for the World Cup will boost the aluminum industry.”

Mr Al Mekdad said that the region must focus on creating more downstream production opportunities an area which investors need to pay attention to. Gulf Extrusions will open a new plant near Emirates Aluminum in Abu Dhabi by 2013 with a production capacity of 50,000 tonnes a year for locomotive and industrial products. This will be JV with Abu Dhabi Basic Industry Corporation with 50% ownership for each.

Aluminum produced in the UAE and the region is used by international car and plane manufacturers. Gulf Extrusions exports rail guides for the sun roofs of cars such as Jaguar, Land Rover and Range Rover. They also supply Halliburton with tubes for testing oil rigs. Local Aluminum is also used for architecture purposes and can be found in windows, doors, facades and kitchen cabinets. 90% of the GCC downstream production goes to construction and during the construction downturn Aluminum extrusion companies were operating at 50% to 60% capacity in 2010 and 2009.

Mr Mahmoud Daylami general secretary of the Gulf Aluminum Council said that some of the major challenges facing the Gulf Aluminum industry include the availability of natural gas required to produce Aluminum, importing raw materials as global commodity prices soar and developing Gulf talent on the technical side of production. Still, industry representatives were optimistic about the role of the Gulf producers in meeting the increasing global demand for Aluminum.

Mr Daylami said that by 2020, the world is expected to consume 70 million tonnes of Aluminum compared to the current 42 million tonnes and demand is now increasing by 5% every year the equivalent of 2 or 3 smelters a year. Somebody has to fill that gap. Currently Gulf countries export 80% of their production mainly to Europe and the Far East.

He said that Gulf countries invested USD 40 billion in the Aluminum industry, with Saudi Arabia adding another USD 10.5 billion by 2013 for its new smelter. By 2015, Gulf nations plan to produce over 5 million tonnes a year or 12% of the world Aluminum production up from its current 3.5 million tonnes.