72 December 2011 BTM With 45 per cent of its output supplied to the domestic market, Aluminium Bahrain (Alba), one of the world’s largest aluminium smelters has, quite clearly, contributed to the development of a huge downstream aluminium sector, within the Kingdom of Bahrain. The large and growing size of this downstream sector can be staggering when one considers the fact that Alba produces more than 870,000 tonnes annually. And, even though almost half of Alba’s output is going to the local market, the demand for the raw material is such that many of Bahrain’s downstream manufacturers are now also importing from other smelters in the region. One such manufacturer is Bahrain Aluminium Extrusion Company (Balexco). Its CEO, Jassim Al Seyadi, says, “The principal raw materials for us are the billets and logs, and they are procured from Alba, Bahrain. But quite recently, we have started purchasing small quantities from Qatalum, Doha, as well.” A host of downstream players in Bahrain, by importing raw material, are giving a new impetus to Bahrain’s aluminium sector. They are producing a wide range of products, most of which are being exported, bringing in foreign revenue. GARMCO, Midal Cables, BWP, Bamco, Balexco, Aluwheel, and Bahrain Atomization, are all among those companies that are growing fast, and are hungry for raw material. And Alba, and other smelters in the region, are trying hard keep in pace with the demand from these downstream producers in Bahrain, which shows that the government’s economic planning of the 1960s is paying off. Origins of the prime mover Energy costs are nearly 20 per cent of the total costs of any aluminium smelting industry; the raw materials, manpower, equipment and other costs make up the remaining 80 per cent. So, with Bahrain’s plentiful supply of gas, and with the government’s keen interest to shift from excessive reliance on oil, setting up an aluminium smelter seemed the wisest thing to do. A consortium of international aluminium users, therefore, chose Bahrain to locate a smelter; in May 1968, Alba was incorporated. Very soon, in January 1969, a contract was signed for the construction of a smelter with a designed capacity of 120,000 tonnes per year. But today, Alba, from its five lines, produces more than 870,000 tonnes annually. That is more than seven times the original output when it began. During their recent announcement of Alba’s support to Gulf Industry Fair (GIF 2012) to be held in Bahrain in February 2012, Laurent Schmitt, Alba CEO said, “Alba continues to stimulate the growth of the downstream aluminium sector in Bahrain and is performing well internationally, by continuously intensifying its efficiencies to record production increases of 8.4 per cent in 2011 over the same quarter last year and improved margins against tough competition.” That Alba is stimulating the growth of downstream aluminium sector, as a prime mover, is evident from that fact that the sector grew much faster than the economic planners had envisaged. Downstream developers Extrusion, rolling, casting, fabrication and recycling are the major downstream manufacturing activities, and the companies that sprung up in Bahrain since the 1970s are all in these and allied areas. In 1973, almost immediately after Alba started operations, Bahrain Atomizers International (BAI) was formed to produce atomised aluminium powder and pellets that are used in manufacturing paints, vehicle spare parts and in steel industries. Shortly afterwards, in 1977, saw the formation of two companies that are now among the major players in this sector — BALEXCO and Midal Cables. Both these companies began to regularly buy a part of Alba’s produce to manufacture aluminium products for not just Bahrain, but to meet world demand. Midal Cables is now even reaching abroad. In recent years its managing director, Hamid Al Zayani, has signed many major deals, including one with Abu Dhabi Basic Industries Corporation for the establishment of a $100 million aluminium rod and conductor plant as a joint venture at Khalifa Port and Industrial Zone in Taweelah in UAE. Another Midal Cables deal is with Tomago Aluminium, of Australia, for a long-term hot metal supply agreement where, with an Australian based partner, the company plans to build a AS$ 30 million aluminium products manufacturing facility in Hunter, creating 290 jobs there. The Gulf Aluminium rolling Mill Company (GARMCO), a Gulf joint venture in which Bahrain holds 38 per cent, commenced production in 1986 and produces rolled products, recycled foil, circles, aluminium coils, amongst others. GARMCO’s CEO, Dr Adel Hamad A Rehman Hamad, says with pride, that “GARMCO has been classified as a niche player for annualreview JOEL INDRUPATI/ TARA HENARI A prime mover in the aluminium sector, the Kingdom’s prime mover status as the location of first regional smelter is now shifting to the downstream market. Alba smelter Finessing a Niche
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