Dubal mulls new refinery, sees 2007 output rising by 13.1pc

DUBAI — State-owned smelter Dubai Aluminium Co. (Dubal) might build a new refinery abroad to meet rising global demand and is likely to raise its output by 13.1 per cent in 2007.

By (Reuters)

Published: Fri 13 Apr 2007, 9:26 AM

Last updated: Sat 4 Apr 2015, 9:06 PM

"We are seeing this increase continuing this year, and by the end of this year we will produce 890,000 tonnes to meet global demand," Khalid Essa Abdullah Buhumaid, a Dubal general manager, said.

The company produced 787,000 tonnes of aluminium in 2006. Dubal is "studying building a new refinery with another party or country", he said, but declined to say where it might be built.

"I'm officially visiting them (possible partners) by the end of the month to discuss it."

He added: "In the first quarter this year, we produced 220,000 tonnes compared to 195,000 last year."

Dubal is still on target to increase its 2008 production to 920,000 tonnes when two new potlines in Jebel Ali in Dubai become fully operational, he said. Dubal's first quarter aluminium exports to European countries, excluding Turkey and Greece, amounted to around 31,000 tonnes, a drop of 31.1 per cent from the previous year.

"One of the major reasons behind the drop is the tariff imposed on aluminium imports from Gulf countries," he said.

The European Union currently imposes a six per cent levy on aluminium imports from Gulf countries.

But when a planned free trade agreement between the EU and Gulf Arab states is signed, Gulf aluminium exports to Europe would be tax-exempt.

"If the tariff is lifted we will increase our exports to Europe by more than 15 per cent and we (Gulf countries) are in a very advanced stage of the negotiations," Buhmaid said.

Karl Falkenberg, deputy director general with the European Commission's trade directorate, has said the EU hopes to conclude an agreement in the first half of 2007, but will need to see concessions on services and investment first.

Dubal's only competitor in the Gulf Arab region is Aluminium Bahrain (Alba) with a capacity of 830,000 tonnes a year. In five years, Dubal aims to be among the world's top five aluminium producers.

The smelter's main source for alumina is Australia, but it is looking for more suppliers and also targeting joint ventures with low cost alumina producers to protect itself from price fluctuations. The smelter has announced plans to build an $8 billion aluminium smelter complex, which would start operations in 2010, which would raise its output capacity to 1.4 million tonnes a year, making it the world's largest.

Russia's Rusal operates the world's biggest smelter, at Bratsk, with a capacity of 976,000 tonnes per year.

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