Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister for Finance and Industry and Chairman of Dubai Aluminium Company (DUBAL), today approved a massive capacity expansion project for DUBAL costing over AED1 billion (US$284 million) for the existing smelter to meet the ever-growing customer demand for its high quality metal.
Sheikh Hamdan said: "The global ranking of Dubai and the UAE as major investment destinations is because of the government's progressive and business-oriented policy initiatives. DUBAL's strategic expansion programmes are only a reflection of these government policies. DUBAL's current expansion project will act as a stimulant to inject more dynamism to the industry in the region. Consequently, it will make Dubai, the UAE and the region a major powerhouse in the global aluminium industry."
The expansion project at DUBAL, which houses one of the world's largest smelters, will see the aluminium giant add an additional annual capacity of 100,000 tonnes of hot metal, raising its total hot metal production capacity to 861,000 tonnes per year. Currently, with 120 pots in Potline-7 fully commissioned, DUBAL's total production capacity will reach 761,000 tonnes per annum by the end of 2005.
This project is Phase-I of a three-phased expansion plan which forms part of DUBAL's long-term strategy. This project will also ensure that DUBAL is correctly positioned in its path towards medium-term and long-term growth.
Sheikh Hamdan in his directives has reiterated environmental protection should be a key area which DUBAL has to constantly focus on. A state-of-the-art technology fume treatment system at a cost of AED110 million (US$30 million) will be installed as part of this expansion. An environment impact study is currently being conducted to give recommendations in this aspect.
Ahmed Humaid Al Tayer, Vice-Chairman, Board of Directors, DUBAL said: "The additional capacity expansion of 100,000 tonnes will decisively entrench the company in a commanding position from which it can easily handle the burgeoning demand requirements in the region and beyond."
"For DUBAL, it is imperative to maintain its current dominant position and explore areas for its growth trajectory. We are looking at nearby regions to strengthen our market base. Thus, DUBAL's risk diversification efforts will ensure that we maintain our international position as a major and serious player in size and market penetration," said Mr. Al Tayer.
Construction on the DUBAL expansion project is expected to begin during the third quarter of 2005. It is scheduled for completion by the fourth quarter of 2006. In effect, the current expansion will result in 13% additional hot metal production a year. The internal rate of return works out to around 16% a year and the pay back period is expected to be 6 years.
It is pertinent to note that DUBAL's Potline-7 expansion project was completed in a record time of 14 months and resulted in saving nearly US$ 30 million from the budgeted cost.
Mr. Abdullah J. M. Kalban, Chief Executive Officer, DUBAL, said: "DUBAL will use its own in-house-developed D20 technology for the expansion project. The project will add 128 cells more to the recently completed Potline-7, bringing the total to 248 cells. Potline-7 currently has 120 cells, which went fully operational recently. Plans are also afoot to add another 36 cells to Potline-9, which was completed in 2003, once again bringing the total cells for this Potline to 248."
Mr. Kalban observed: "The prominent feature of DUBAL's in-house cell reduction technology is its ability to reduce operational cost, making the expansion more efficient. This technology already has a proven track-record in DUBAL and we will be utilizing our current available capabilities to maximize our assets."
"The benefit of this lucrative expansion project will continue to make DUBAL one of the lowest and the most cost-effective aluminium producers in the world. This is why we can proudly say that we continue to enjoy the benefits of economies of scale. The feasibility study conducted for the expansion also estimated substantial cost saving," added Mr. Kalban.
“One of the main reasons behind the expansion project is our continuous desire to provide the highest levels of support to our customers and to meet their ever-growing demand for high quality products,” Mr. Kalban remarked.
For DUBAL the most notable contribution to the expansion project will come from a team of UAE nationals, who will be leading and supervising all aspects of this major endeavor. It is worth mentioning that the UAE nationals had played a significant role in the recent commissioning of Potline-7, which was completed ahead of schedule and well below the budgeted cost.
Also, keeping in line with the directives of Sheikh Hamdan, DUBAL plans to award over 40% of this project to local contractors. This is expected to result in a ripple effect with more job creation and revenue that will benefit the local economy, strengthening the manufacturing base of the country.
"The Gulf region will be a key player in the future towards supplying primary aluminium to the world and is estimated to contribute 11% of worldwide production. We are quite confident that the fresh expansion project will serve to further elevate the standing of Dubai and the UAE as a whole," Mr. Kalban pointed out.
© 2005 Al Bawaba (www.albawaba.com)
