How has the downturn impacted business for you? How were you able to increase production, sales, and ultimately profit while the real estate market is still struggling in the UAE?
MAZROUEI: The downturn has had a limited impact on Emal. In 2009 we were just starting the commissioning and completing the construction phase. From the end of 2009, we were starting the ramp up to 2010. We were able to increase production 35% ahead of schedule, which reflected an increase in income of 28% overall. Even though construction was declining in the UAE during the downturn, Emal was built with a long term strategy that reflects the 2030 Vision of Abu Dhabi. We see a great increase in the demand of aluminium by 2015. 2009 was the start of the recession, 2010 was a ramp-up phase, and in 2011 we are in a state of stability and we are seeing an increase in demand on the local market as well as the international market. From January to February 2011 we saw an increase in price of 3%, from February to March we saw another 2% increase, so overall we see an increase in demand and that is impacting the pricing structure not only in the local region but in the international market as well.
What were your profits for 2010? How much of an increase was this over 2009? What are your expectations for 2011?
MAZROUEI: Profit in 2010 does not really reflect the actual profitability of the company because we were in the ramp-up phase. We still did fantastic, as mentioned, we had an increase in production of 35%. The increase in demand and prices enabled us to achieve this. Looking at 2011, we hope the increasing prices and further increased demand will allow us to stabilize production at 750,000m tons per year. 2011 looks promising. We believe there will be an increase in demand and that this increase will continue. There is opportunity for us because of our skilled work force and because of our product quality. Due to our location here within the UAE in the Khalifa Port zone, we have an increased reach to Europe, the Far East, and the US. For 2011, about 70% of our product has been sold on the international market and about 30% of it has gone to the local market.
Under current economic conditions and market pricing, how attractive is an expansion for Emal? How long would an expansion take to complete and what kind of investment would this represent?
MAZROUEI: Expansion for Emal is essential. When we started phase one, we knew that we needed to segregate phase one and two because of the sheer size of the project as a whole. Economic studies indicate that phase two is ready to start now. We are fortunate to be in the Gulf region because of the accessibility to energy, the skilled workforce, the economic environment of Abu Dhabi today, and the infrastructure, from the airports to the roads to the seaports. We anticipate the construction on phase two will be complete by the end of 2013 and the stabilization and production will begin in 2014. Because of the experience gained in phase one we expect a capital expenditure (CAPEX) for phase two to be even more competitive.
What are your biggest export markets? What new trends are emerging with regard to exports?
MAZROUEI: Our export markets today are very wide. We look at Asia, Europe and the USA as markets. Those are three strategic markets for our product today. In 2010, we managed to export all of our products to 19 countries for 80 companies. In 2011, we are scheduled to export to 34 countries for 200 companies.
As an anchor major industry in this region, we will be able to attract downstream investors by providing hot metal aluminium to the manufacturers which will give them a competitive edge, especially with the reliability of raw material supply and the cost of this resource.
How do costs for smelting and export in the UAE compare to other production bases throughout the world? How would you describe the level of competition among metal smelters in the GCC region?
MAZROUEI: Being in Abu Dhabi has a lot of benefits. We have the skillful workforce and the cost of that workforce is competitive internationally. Second is the availability of energy. We are close to the source for energy, which gives us an edge over others. Third, we believe that Abu Dhabi has the environment for construction mega projects - not only in the oil industry but in the metal industry as well. We have proven that in our own phase one. We believe that now, there is opportunity for downstream companies to come and flourish because of what Emal has done. The government’s 2030 Vision emphasizes the creation of a sustainable downstream industry. There is a lot of collaboration between the smelters in the GCC. We all meet regularly and look at the international market. We collaborate wherever and whenever we can. We see a lot of opportunity to collaborate on addressing the needs of the market, on marketing, safety, and also on environmental issues.
How have the recent disasters in Japan impacted global aluminium prices?
MAZROUEI: The recent disaster in Japan had a very limited impact on Emal. We are in a very stable production phase and we have already managed to sell our products internationally. We believe there will be a strong recovery in Japan not just in construction, but also in cable and rodding product – aluminium based products. This will stimulate demand for metals. This increase will be reflected in the market itself. Overall, we have only seen little increase in aluminium prices.
Are there opportunities for downstream aluminium manufacturing facilities in the emirates?
MAZROUEI: The downstream industries in the UAE have been number one on the agenda for Emal based on the 2030 Vision of Abu Dhabi. We are very supportive of this initiative. As an anchor major industry in this region, we will be able to attract downstream investors by providing hot metal aluminium to the manufacturers which will give them a competitive edge, especially with the reliability of raw material supply and the cost of this resource.