Amid “Corona” crisis: EGA’s adjusted EBITDA records to $1.13 billion for 2020, a rise by 63% Y-o-Y

On 16^th March 2021, Emirates Global Aluminium, UAE’s one of the largest industrial company and the world’s largest ‘premium aluminium’ producer, reported adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (adjusted EBITDA) of $1.13 billion for 2020, a 63% increase over 2019.

EGA’s smelting EBITDA margin for 2020 ranked as the best worldwide with 23% (2019: 14%)

In 2020, EGA curved its aluminium product mix, in response to fluctuating market demand caused by the impact of the COVID-19 pandemic on global manufacturing.

However, for the year as a whole EGA maintained its position as the world’s largest ‘premium aluminium’ producer by volume, with sales of value-added products of 1.8 million tonnes or 72% of total sales. EGA sold value-added products in 2020 to more than 400 customers in over 50 countries.

Value-added products attract higher premiums over benchmark prices than those achieved by standard aluminium and enable EGA to maximise the value of its primary aluminium production.

EGA sold 2.52 million tonnes of cast metal in total in 2020 compared to 2.60 million tonnes in 2019. The plunge was in part due to product mix, as alloying materials are not added in the P1020 casting process.

Domestic sales to the downstream aluminium sector that has grown around EGA into one of the UAE’s most significant industries, grabbed 252 thousand tonnes compared to 294 thousand tonnes in 2019.

Cash generated from operating activities was up 35% to $1.5 billion, compared to $1.1 billion in 2019. EGA pursued discipline working capital, which was reduced in 2020 to generate additional cash, and also focused on further improving operational efficiency.

Abdulnasser Bin Kalban, Chief Executive Officer of EGA, said: “EGA delivered a significantly improved financial performance in 2020 in the most challenging year for the global aluminium industry in decades. We achieved this through product flexibility, a relentless focus on controllable costs and cash generation, and strong ramp-up performance in our new upstream projects despite the additional challenges of COVID-19.”

“The recovery of the global aluminium market that began in the second half of 2020 has continued into 2021, based on the brightening world economic outlook and growing optimism about the rollout of COVID-19 vaccination. We expect benchmark aluminium prices to remain around $2,000 for 2021 as a whole.”

“At EGA we continue to be focused on further improving the global competitiveness of our business as a national industrial champion for the UAE.”

Lower benchmark aluminium prices and premiums led to a reduction in revenue to $5.1 billion, compared to $5.6 billion in 2019, partially offset by revamp of bauxite sales from EGA’s bauxite mining subsidiary Guinea Alumina Corporation.

GAC exported 9.56 million tonnes of bauxite ore, making EGA the second-largest third-party seller of bauxite in the world in its first full production year.

EGA’s Al Taweelah alumina refinery produced 1.92 million tonnes of smelter grade alumina, close to its annual nameplate capacity of 2 million tonnes in its first full year of production. Al Taweelah alumina refinery’s production was at or above nameplate capacity in each month of the fourth quarter of 2020. Al Taweelah alumina refinery supplies to EGA’s aluminium smelters.

As part of its optimization of production and investment in high return growth projects, EGA is expanding the existing potlines at its Al Taweelah aluminium smelter by 66 reduction cells to increase production capacity by 78,000 tonnes of hot metal per year.

The expansion project is currently 60% complete. Energisation of the new reduction cells, which use EGA’s proprietary technology, is expected in three phases during 2021 with all the new reduction cells in production this year.

EGA has developed its aluminium smelting technology in the UAE for more than 25 years. In 2020, EGA signed agreements that could lead to the export of its technology to Indonesia and Colombia.