Dubai Cable building $60 million aluminium plant

Dubai Cable Co., the second-largest cable manufacturer in the Middle East, is building its first aluminium plant as customers in Saudi Arabia to the US seek cheaper alternatives to copper for power transmission.

The $60 million factory in Abu Dhabi in the United Arab Emirates will have capacity to produce 50,000 metric tons of aluminium rod and overhead conductors annually, Andrew Shaw, managing director of Dubai Cable, said in an interview Monday at the company’s copper rod plant in Dubai. The project, called Ducab Aluminium Co., will create 120 to 140 jobs with its opening planned for the first quarter of 2016, he said.

Copper is losing about 2% a year of demand to less costly materials such as aluminium, or about 500,000 tons, London-based researcher CRU estimates. Aluminium is about 30% cheaper than copper and supplies in warehouses monitored by the London Metal Exchange are 12 times larger.

“Given the relative economics of copper versus aluminium, particularly in Saudi Arabia, they’ve tended to chose aluminium,” Shaw said. “We see a slow substitution of copper for aluminium, particularly in a country like Saudi which is a very large market.”

Dubai Cable, started in 1979, is mostly a copper buyer, purchasing about 135,000 tons of the metal a year, with about 70,000 to 80,000 tons used to make cables. Last year, it bought 8,000 tons of aluminium. Riyadh Cables Group is the biggest cable producer in the Middle East, according to Shaw.

The UAE’s Emirates Global Aluminium will provide all the hot molten metal needed for Ducab Aluminium at the Kizad Khalifa Industrial Zone in Abu Dhabi, Shaw said. “From a logistics and an industrial operating efficiency point of view, this is great. They’re like the mother hen, fostering a downstream industry.”

Ducab Aluminium is 60% owned by Dubai Cable, and the rest by Senaat, which owns Abu Dhabi companies including National Petroleum Construction Co. and Emirates Steel. Dubai Cable itself is owned 50% by Senaat and the other half by Investment Corp. of Dubai, which oversees the government’s commercial assets.