Industry

Hotter Than The Sun

Aluminum

Oman joined the aluminum smelting game in 2004, with the formation of Sohar Aluminium. Its smelter, up and running by 2008, was the third such facility in the GCC, after […]

Oman joined the aluminum smelting game in 2004, with the formation of Sohar Aluminium. Its smelter, up and running by 2008, was the third such facility in the GCC, after those in Bahrain (opened 1971) and Dubai (opened 1979). Since then, similar facilities have opened in Qatar and Abu Dhabi. Production has thus grown in the GCC over the past 40 years, from 120,000 tons per year in 1971 to approximately 5 million today, or 13% of world output as of end-2013. The Sohar smelter has a capacity of around 360,000 tons per year. Sohar Aluminium offers a number of products, which it sells both domestically and internationally. Products include 23.7 kilogram ingots, 700 kilogram sows, and hot metal, which is sold to its own downstream partners to reduce energy consumption in subsequent processing. The smelter is located in the Sohar Industrial Estate (SIE) and is joined by a Sohar Aluminium-run 1,000 MW combined-cycle power plant and a port facility with a capacity of 75,000 tons, which is used to import raw materials and also export solid products.

And since the beginning, Sohar Aluminium, which is owned by the Oman Oil Company (40%), the Abu Dhabi Water & Electricity Authority (40%), and Rio Tinto Alcan (20%), has aimed to develop a local downstream industry. In that respect, the company has helped to establish and then supply two downstream companies, namely the Oman Aluminium Processing Industries Limited (OAPIL) and Oman Aluminium Rolling Company (OARC), the latter of which opened its plant in 2014. According to Sohar Aluminium, developments downstream mean that it will be able to sell 200,000 tons of produce to its local partners by 2016. Over the long term, the company plans to consistently sell 60% of its production in hot metal form to its downstream partners, with the remaining 40% exported in the form of ingots and sows. Currently, OAPIL takes 50,000 tons of the smelter’s output, while OARC takes between 140,000 and 160,000 tons.

The OARC’s plant, located next to the Sohar smelter itself, opened its doors in 2014 following an investment of $387 million and has a capacity of 140,000 tons of multi-purpose aluminum sheets, which are set to find their way into markets in the Middle East, Europe, and North and South America, as well as Australia. Ron Marchbanks, CEO of OARC, shed light on why Oman, and the region, has emerged as a hub of upstream and downstream aluminum production: “we made the decision to build this plant following the construction of the Sohar aluminum smelter, the thinking being that this was the best location in the world to develop this business—both from an energy and labor standpoint,” adding that, “by contrast, the US is not seeing much expansion in the aluminum business.” Marchbanks is also vocal on the plant’s ability to kill two birds with one stone, by raising the Omanization rate and boosting in-country value (ICV). “This is the first major company fully funded by Omani investment, and where we are starting with 100% Omani operators,” he told TBY, adding that, in terms of employment, “we have a 74% Omanization rate overall.”

OAPIL, an OMR15 million plant, has a capacity of 48,000 tons, which it plans to double to 100,000 tons in the future. The company itself is a joint venture between Oman Cables Industry and Takamul Investments Company, launched in 2009. The company’s main products include rods and overhead conductors, with an upcoming investment to be made in a new production line. To keep up with demand, Sohar Aluminium also plans to spend $35 million over the next five years to ramp up production by approximately 28,000 tons.

As we move into 2015, Oman is facing the competition with a strengthened downstream and the prospect of more from the upstream. And as global demand grows and the GCC increases its presence in the smelting and processing arenas, Oman could have a significant role to play over the coming decades.

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