Sohar Aluminum studying expansion plans; downstream industry
October 7, 2017 | 6:34 PM
by Syed Haitham Hasan/[email protected]
Sohar Aluminum currently produces 375,000 tonnes of primary Aluminum per annum. - Times file picture

Muscat: Expansion plans are under study by the board of Sohar Aluminum to increase capacity in line with Tanfeedh’s recommendations along with a strategy to grow downstream Aluminum sector in the Sultanate.

Oman's National Plan for Economic Diversification, Tanfeedh, recommended a multimillion rial investment to increase the current production capacity of Sohar Aluminium that can establish more industrial activities while creating additional jobs in the capital-intensive industry.

“As Sohar Aluminum, we are proposing to expand our plant but this will require shareholder appetite to invest. It is under discussion in Tanfeedh as well. We are always hoping to expand, because the plant itself was designed from day one to have more than 1 pot line,” Said Mohammed Al Masoudi, CEO of Sohar Aluminum said in an interview with Times of Oman.

“We are still in the very early stages. There are many things that need to be done first, such as conducting socioeconomic studies. Our first pot line was a Greenfield project. The brownfield is less of a challenge but is a capital-intensive project that requires billions of dollars in investment. However, we are hoping Sohar Aluminum can expand as it will benefit Oman.”

Sohar Aluminum currently produces 375,000 tonnes of primary Aluminum annually. Nearly 60 per cent of this is used for supply to the local market while 40 per cent is exported in accordance to the agreement with Rio Tinto. Al Masoudi said that industrial policies and expansion of plant can help the local downstream sector.

“At the moment we have to export minimum of 40 percent to our Shareholder, Rio Tinto and I think we have the right kind of balance. If a decision to expand in the future is made, I believe Sohar Aluminum will enhance the local downstream market while balancing local and export requirements. We also need good policies that can help Aluminum dependent industries and create an economic cycle. We are working hard to promote these downstream industries,” he said.

Aluminum prices plunged in the past few years due to over capacity in international markets, however, the prices have seen a slight increase in the past months, thanks to the Chinese government's crackdown on smelters not conforming to local environment standards. China is the largest source of supply and demand of Aluminum in the world with 50 per cent consumption and supply stemming from the Asian nation.

“We have no issues with demand, and demand will continue. We have seen a demand growth of two to three percent over the past few years. The issue with supply is due to the increased capacity from China. Problems may arise if China starts exporting products or semi products to the rest of the world. That is when you will see the LME or metal prices dropping. Fortunately, for the last couple of months, the LME is going up. Whether there is a change in fundamentals or not we are positive that demand will continue. China will start to curb on environmental issues, closing smelters that are not meeting their own environment regulations. “Al Masoudi said explaining the macro global situation.

“During Arabal 2017, we will have experts present, including ones from China who can shed some light on the current situation. Clearly, the role of China is important, because it currently produces 50% of primary Aluminum in the world.”

Al Masoudi said that Aluminum has an advantage over other metals as it is light and can be exported as different products, that add value. He added that Oman is benefitting from the FTA with USA and there are a lot of potential projects that can be won in the US market.

Sohar Aluminum boasts an Omanisation rate of 76 per cent.

“We will continue to Omanise as more Omanis are ready to take up jobs. We still need expats to work with us too. But we are far ahead of other GCC countries who have a lesser nationalisation ratio in this industry. In less than 10 years, we have achieved a lot. We are a benchmark for technology. Environment, Health and Safety, remains to be our number one priority. If there is new technology, we strive to adopt it. When it comes to reduction of emissions, we are ready to take up any new innovations in this field.”

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