“GCC smelters now operate at a much higher amperage than most smelters around the world with high efficiency,” Mahmood Daylami, Secretary General, GAC

Gulf Aluminium Council (GAC) is a coordinating body that represents, promotes and protects the interests of the aluminium industry within the Gulf. The council’s main objectives are to provide a forum to develop strategies for common issues and concerns facing the aluminium industry in the region, and to share best practices so as to improve the efficiency of the industry. GAC also work through committees consist of speacialist from the member organisation with the objective of sharing best practices, reduce cost, improve productivity and efficiency. AlCircle spoke to Mahmood Daylami, Secretary General, GAC on a number of topics about the Gulf aluminium sector, including its current production and market scenario, its technical brilliance and future prospects.  Here is an excerpt from the conversation:

AlCircle: What are the key driving factors behind the steady growth of Aluminium industry in the Middle East?

Mr Daylami: The main driver for the Aluminum growth in the Middle East, more specifically the Gulf is the growing world demand for the metal. Given the availability of energy at a competitive price, the geographic location and modern infrastructure, logistic and transportation systems, make the GCC to be one of the leading regions for the aluminum industry in the world.

The success of the industry over the years has provided added confidence for the financial institutions to facilitate the needed capital for expansion projects adding a further competitive advantage of economy of scale.

AlCircle: What is the significance of Middle East Aluminium industry in the global aluminum sector?

Mr Daylami: The six GCC smelters produced 5.4 Million tonnes of primary aluminum in 2018, and the expectation for 2019 is 5.7 million tonnes which constitute 9% of the world total Aluminium production. Three of the smelters produce more than one million tonnes a year ( EGA Jebel Ali, EGA Al Taweela and Alba). EGA producing more than 2.5 million tonnes of primary aluminum a year is considered the fourth largest aluminum producer in the world, with its technology and research center that plays a significant role in the development of the industry.

AlCircle: What makes the Middle East smelters some of the most technically advanced and cleanest smelters in the world?

Mr Daylami: Four out of six smelters are only ten years old which are relatively new compared to other smelters around the world (Maaden Aluminium, Sohar Aluminium, Qatalum, and EGA Al Tawelah) and the older ones (Alba and EGA Jebel Ali) have been extensively modernized over the years with latest technologies and equipment in the smelters and power generation facilities. As a result, GCC smelters now operate at a much higher amperage than most smelters around the world with high efficiency. For example, the average current efficiency at the GCC smelters is 12.9 KWh/ tonne of aluminum while the world average is 14.5KWh/tonne. This has a significant impact on reducing energy consumption, emissions and cost.

AlCircle: How are the GCC smelters working towards upstream integration despite the limitation of bauxite in the region?

Mr Daylami: Saudi Arabia has huge bauxite reserve which is the reason why Maaden Aluminium is a fully integrated Aluminium company with its alumina refinery supplying its total need for alumina. EGA also owns bauxite mine in Guinea and just completed the construction of two million tonnes per year alumina refinery adjacent to Al Taweela smelter in Abu Dhabi supplying 40% of EGA's alumina needs. Alba is exploring upward integration opportunities. The reason is to control cost, quality and increase the security of raw material supply.

AlCircle: What are the downstream expansion potentials that you see for the Middle East Aluminium sector?

Mr Daylami: The downstream production generally reflects the local market needs for constructions but has also expanded its activities to cater to world demand for aluminum cable, auto industry, and rolled products. Given the advantages of availability of  casthouses that are capable of producing aluminum in various shapes and alloys or supply the metal in liquid form, there is potential for a higher-end product specially to cater to the transportation sector.

AlCircle: How is the Middle East Aluminium industry creating substantial opportunities for the global EPC and technology sector?

Mr Daylami: Over the last thirty years, GCC smelters have been in constant expansions, modernisations and facility improvement projects in all areas of the industry. Such a trend is very likely to continue in the coming years providing opportunities for EPC and EPCM. At the next GAC Annual Dinner in March 2020, each CEO will announce their smelter capital expenditure plan for the coming year as part of smelters proactive strategy to engage the technology suppliers in their action plan.

AlCircle: To what extent has the Aluminium sector succeeded in the industrial diversification towards the non-oil sector in the Middle East region?

Mr Daylami: The Aluminum sector in the GCC has been instrumental in industrial diversification in the Gulf through the creation of several downstream companies, logistics, service organisations, transportations, and manufacturing. As a result of Aluminum industry employ around 14,000 people directly and 40,000 indirectly, Furthermore, many technology suppliers have moved to the GCC to provide better coordination, storage, and engineering services.

AlCircle: What role does GAC play in integrating and supporting the Middle East Aluminium industry?

Mr Daylami: GAC is a coordinating body that represents, promotes and protect the interests of the aluminum industry in the Gulf. The council's main objectives are to provide a forum to develop a strategy for common issues and concerns facing the aluminum industry in the region, and to share best practices to improve the efficiency of the industry.

AlCircle: What is your production and consumption forecast for the GCC primary Aluminium sector in 2020?

Mr Daylami: The estimated primary aluminum production for the GCC in 2020 is around seven million tonnes and the consumption around 2 million tonnes.