Dubai Aluminium to review output targets

DECISION-MAKER: 2007 photo of Dubal chief executive Abdulla Kalban (r). (Getty Images)

Dubai Aluminium Co (Dubal) has a production target of 1 million tonnes for 2009, up 4 percent from this year, but may review it due to the global financial crisis, the state-owned company's chief executive said on Sunday.

Abdulla Kalban said a slowdown in the global economy would push demand down significantly lower, but Dubal was committed to pushing forward its projects.

"It's 1 million tonnes in my mind, and we haven't changed that target yet," Kalban told reporters. "With this financial crisis we will have to see how it goes, we have a board meeting in December... we will know by then."

A global economic slowdown has drastically reduced the demand outlook for industrial metals like aluminium.

Analysts say aluminium prices at $2,050 are below costs paid by the highest cost producers, many of which are delaying expansion plans of idling capacity.

Late last week the Aluminium Corp of China, also known as Chalco, said it had shut down 38 percent of its annual capacity of alumina capacity, which is used to make aluminium.

Aluminium closed at $1,960 a tonne from $2,039 on Thursday, a fall of nearly 40 percent from an all-time high of $3,380 on July 10.

"Demand will go down because of the financial crisis, and that has already started and is evident by looking at inventories globally, which have risen," Kalban said.

He added that there were no plans presently to either scale down or delay the start-up of its joint-venture 1.5 million tonne-per-year green-field aluminium smelter complex with Mubadala Development Co.

"The project is on track and we expect to start phase 1 in the first-quarter of 2010," Kalban said.

Kalban said phase 2 of the mega-project has already started, with a feasibility study currently underway.

"We are not thinking of cancelling or delaying any of our projects... but we are going to have to wait and see what happens with the financials." (Reuters)

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