The recent sighs of relief practically drowned out the drone of heavy machinery at Emirates Aluminium (EMAL) as prices for the metal rebounded. The recovery has come just in time for the completion this year of the company's US$5.7 billion (Dh20.9bn) smelter. The huge plant at Taweelah in Abu Dhabi, combined with other smelters across the GCC, will make aluminium one of the region's most important export commodities.
No other region outside of China has invested more in the light metal in the last five years. The price of aluminium on the London Metal Exchange closed at US$2,255 a tonne last week, and has mostly stayed above $2,000 since late November. It has rebounded 75 per cent since February last year, when the economic slowdown and a glut of new output capacity drove prices down to $1,288 a tonne, down from more than $3,300 a tonne in July 2008.
Prices have risen since late last year on the back of the global economic rebound, especially in key markets in east Asia. Aluminium is used in a vast number of industries but key buyers include makers of food packaging and cars. The price has pulled a number of stocks up with it. Alcoa, the US aluminium giant, is up 151 per cent from a low in March last year. And the share price of the Norwegian aluminium company Norsk Hydro is up 122 per cent.
Closer to home, the improved price could affect major decisions at EMAL, which is co-owned by Mubadala Development and Dubai Aluminium. Mubadala, a strategic investment company owned by the Abu Dhabi Government, is "perfectly fine" with current prices, said Waleed al Muhairi, its chief operating officer. "Right now we're quite comfortable where the markets are at," Mr al Muhairi said. The outlook for the aluminium market would be a factor in a decision this year about whether to invest more money to double the size of the EMAL smelter, he said.
While few analysts expect few further large gains, they do not see another major dip. A weighted average of 16 forecasts surveyed by Bloomberg predict prices will hold between $2,100 and $2,300 through 2012. cstanton@thenational.ae