EMAL, Dubal Merge into Mega Emirates Global Aluminum

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Dubai Aluminum (Dubal) and Emirate Aluminum (EMAL) have agreed to merge into Emirates Global Aluminum, a jointly held, equal-ownership company that will integrate Dubal and EMAL's operations.

The agreement, which was signed on Monday, will create the world's fifth-largest global aluminum company (by production) following the completion of EMAL's Phase II in the first half of 2014, when it will have the capacity to produce 2.4 million tons of aluminum annually.

Mubadala Development Company (ICD) of Abu Dhabi and the Investment Corporation of Dubai are the two shareholding companies in the new Emirates Global Aluminum (EGA). EMAL was formed in 2006 as a joint venture by the two companies. The companies have been planning to merge for the past three years.

Looking for local and international growth, EGA will build on the base provided by EMAL and Dubal and will expand along the value chain from aluminum smelting to alumina refining and bauxite mining in global locations. With its scale and profile, EGA will continue to attract downstream manufacturing and ancillary businesses related to refining and smelting.

EGA will have an aggregate enterprise value of more than $15 billion and will create 2,000 direct jobs by 2020, which will be in addition to the 6,200 jobs already in existence. It is estimated that a further 6,000 indirect jobs will be created, delivering total employment of more than 33,000 people by the UAE aluminum sector through the end of the decade.

The low cost of production through abundant energy inputs, which account for about 35% to 40% of smelting costs, give EGA an advantage over other producers. Global production is now believed to be operating at a loss with major, established companies cutting down smelter production in favor of expansion in aluminum product processing, where the margins are higher than in primary aluminum production.

EGA is expected to make $6.6 billion from the sale of 2.4 million tons of output in 2015, up from $4.3 billion in sales on 1.8 million tons in 2012. A combined sales operation and other forms of company integration will produce significant cost savings.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.