Challenges and Opportunities in the Aluminium Downstream in the Gulf. Modar Al Mekdad 24 th of September 2014

Transcription

1 Challenges and Opportunities in the Aluminium Downstream in the Gulf Modar Al Mekdad 24 th of September 2014

2 Agenda Aluminium Downstream Opportunities & Challenges Metals Industries: Our response 2

3 Main aluminium downstream businesses Primary Aluminium Rolling Slabs Downstream Tier 1 Sheet Coil Downstream Tier 2 Billets Extrusion profiles Ingots Rods & Conductors Casting

4 The primary aluminium growth in the region - In 2013 the GCC primary aluminum production was 3.9 M tons - In 2015 production is expected to be 5.0 M tons M tons Current Situation M tons Future Situation Export Consumption 0.00 Export Consumption Demand for primary aluminium is expected to increase in the GCC Source: World Aluminium

5 How world aluminium downstream is divided World Downstream Industry GCC Downstream Industry 13% 31% 29% 24% 7% 25% 32% 7% 32% The world aluminium downstream is very balanced while rod & conductors is very important in the GCC Source: CRU 5

6 Current and expected downstream capacity in the GCC Current Capacity Future Capacity Flat Rolled Products 350,000 Mt 800,000 Mt Extrusion 450,000 Mt 600,000 Mt Rod & Conductors 400,000 Mt = 400,000 Mt Casting 100,000 Mt 300,000 Mt Source: 6

7 Agenda Aluminium Downstream Opportunities & Challenges Metals Industries: Our response 7

8 Investment opportunities in FRP have already been realized Flat Rolled Products FRP future capacity: - Production: 350k tons - Installed Capacity: + 700k tons - Pipeline: + 100k tons $ bn, LME 2000$ Current Potential 2018 Capacity TIER 1 TIER 2 TIER 1 TIER 2 QTY Revenue Revenue QTY Revenue Revenue Flat Rolled Products 350,000 $1.12 $ ,000 $2.72 $3.81 Note: 35% of the revenue of Tier 2 is captured in the GCC Opportunities: -Invest in tier 2 industries specifically: foil mills, car body sheets can stock and plates (Fixtures for Automotive Industry, Aviation). 8

9 Challenges in flat rolled products - Acquire technical knowledge and know-how - Access to skilled workforce - Import duties on aluminium transformed goods in GCC - Increase in the cost of utilities 9

10 Investment in extrusions should focus in tier 2 products Extrusion Production capacity is still focused in one main sector: Construction Extra 150k tons to be installed focused in sectors like: Automotive,Industrial,Transportation and Forged products Current Potential Capacity TIER 1 TIER 2 TIER 1 TIER 2 QTY Revenue Revenue QTY Revenue Revenue EXTRUSION 450,000 $1.58 $ ,000 $2.10 $3.00 Note: 85% of the revenue of Tier 2 is captured in the GCC LME 2000$ $ bn Industry Specific Challenges: - Intensive R&D Programs. - Increase in the cost of utilities 10

11 Challenges in extrusions - High import duties to the EU up to 7.5% for aluminium extrusion from the GCC while the duties for the primary aluminium dropped to less than 4% - Lower barriers of entry for the extrusions catering the construction sector which can misdirect the future investments M tons M tons M tons Export Consumption Others Extrusion Source: Gulf Aluminium Council 0.1 Others 0.3 Construction 11

12 Production in rods & conductors caters nearly exclusively the needs in the GCC Rod & Conductors Capacity not expected to increase. Projected value creation through further downstream investment (tier 2). LME 2000$ $ bn Current Potential Capacity TIER 1 TIER 2 TIER 1 TIER 2 QTY Revenue Revenue QTY Revenue Revenue Rod& Conductors 400,000 $1.12 $ ,000 $1.16 $1.80 Note: 80% of the revenue of Tier 2 is captured in the GCC 12

13 Investment should focus on industrial and automotive parts Casting Room for an increase of 200k tons capacity in casting focused on industrial and automotive parts such as: Engine Blocks, Piston Heads, Suspension Parts and Industrial Parts. LME 2000$ $ bn Current Potential Capacity TIER 1 TIER 2 TIER 1 TIER 2 QTY Revenue Revenue QTY Revenue Revenue Casting 100,000 $0.32 $ ,000 $0.96 $1.80 Note: 80% of the revenue of Tier 2 is captured in the GCC Opportunities: - Further investment in tier 2 is necessary (focus on forging, Scrap recycling, machining) 13

14 Global view of the potential increase in value of the downstream in the GCC LME 2000$ $ bn Current Potential Value Added Capacity TIER 1 TIER 2 TIER 1 TIER 2 QTY Revenue Revenue QTY Revenue Revenue FRP 350,000 $1.12 $ ,000 $2.72 $3.81 EXTRUSION 450,000 $1.58 $ ,000 $2.10 $3.00 Rod & Conductors 400,000 $1.12 $ ,000 $1.16 $1.80 Casting 100,000 $0.32 $ ,000 $0.96 $1.80 Total 1,300,000 $4.14 $5.86 2,150,000 $6.94 $10.41 The increase in value to over $ 10 bn (+$4 bn) will have a huge impact in the Job creation in the region,gdp 14

15 In short the main challenges of the downstream can be seen as the following Existence of Technical know-how Availability of skilled work-force Absence of Long Term R& D Programs Import Duties Low barrier of entry Utilities Cost Common Challenges Flat Rolled Products Extrusions Rod & Conductors Casting 15

16 Agenda Aluminium Downstream Opportunities & Challenges Metals Industries: Our response 16

17 Metals Industries Metals Industries formed in 2012 to consolidate under one umbrella, Al Ghurair s business interest in the metals downstream industry, mainly in aluminium. Extrusion (100%) 50 ktons Extrusion (JV 50%) 50 ktons Fabrication (100%) Powder Coating (JV 50%) 17

18 Currently Metals Industries is a complete aluminium solution provider... Extrusion Surface Treatment Remelting Fabrication Casting R&D Design 18

19 ...with a global presence UK Wellingborough Warehouse Holland Amsterdam Warehouse Ethiopia Addis Ababa Sales Office UAE Dubai/Abu Dhabi Production INDIA Mumbai Sales Office QATAR Doha Production Sales Office KSA Riyadh Sales Office 19

20 Our key markets Architectural Construction Industrial Oil & Gas Automotive Electrical Transportation Others Maritime Locomotive 20

21 Metals Industries can be the partner of choice for the sector and the region Open to develop long lasting Partnerships in future downstream projects 21

22 Thank you