Following the strike of Iran on two major aluminium facilities in the United Arab Emirates (UAE) and Bahrain, escalating the US-Israel-Iran conflict, Emirates Global Aluminium (EGA) is now moving to sell a large volume of alumina, which is deemed the key raw material required for producing aluminium. This has been informed by the people who are familiar with the matter for the strike on a smelter which runs on the outskirts of Abu Dhabi.

According to the recent report of Bloomberg, this week, EGA has offered to sell many of its alumina cargoes, especially for the shipments which are planned to move out between April and June. These potential sales came up after the recent attacks on Saturday caused “significant” damage to its Al Taweelah smelter, which is one of the largest in the world. On Wednesday, the company mentioned that it could not provide any further comments at this time.

The firm has been assessing the damage at the site, especially since aluminium prices have taken a sharp leap since the weekend. The surge, which follows another attack on a major facility run by Alba, which was also targeted by Iran. 

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Post this attack, the concerns about the supply risk in the region have made it more difficult after the production cuts at the smelter, which has been struggling with the raw material shortage, which comes in from the Strait of Hormuz.

Aluminium, which is the second most used industrial metal after steel, has been facing rising challenges due to the disruptions in its overall global supply chain, which includes bauxite mining, alumina refining and metal smelting.

Irrespective of EGA not being involved in producing alumina, it is highly dependent on imports, bringing in extra cargoes through the strait to keep operations running at Al Taweelah and its second smelter in Dubai.

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Although EGA does produce some of its own alumina, it still relies heavily on imports, bringing in extra cargoes through the strait to keep operations running at Al Taweelah and its second smelter in Dubai.

What led up to this?

On March 28, two key aluminium production facilities, which are said to be run by Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba), were attacked by Iranian missile and drone strikes. The attack damaged crucial parts of the smelters, including power and processing units, which led to a disruption in the overall operations as well as a temporary shutdown, while the assessments are underway. 

Impact of the attack on EGA

Post the recent missile and drone strike in Iran, EGA shared the details of the impact on its Al Taweelah complex, revealing that operations have faced significant disruptions at one of their key production sites. Moreover, because of the attack, damage was caused to essential infrastructure, including power and aluminium handling units, which led to a complete halt in operations and raised concerns about supply. 

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Given that Al Taweelah plays a vital role in EGA’s overall production, covering smelting, refining and recycling, this disruption may affect customer deliveries. This results in the company working closely with clients and relying on its existing metal stockpiles to meet short-term commitments. 

While more information is still pending to come out, many analysts suggest that if the firm confirms the gravity of the impact, which may lead to an uncontrolled shutdown, further causing metal to solidify in the smelting circuits. However, fixing that damage is deemed not only costly but also time-consuming. Additionally, the analysts at Natixis SA predicted that the recovery may take up to a year to complete. 

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