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Sun 24 Feb 2008 12:08 PM

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Alba considering regional expansion, output hike

Bahraini aluminium producer may raise annual output by 40% to over 1.2mn tonnes.

Aluminium Bahrain (Alba) is considering regional expansion and increasing output by 40% to more than 1.2 million tonnes per year (tpy), its chief executive said on Sunday.

Middle East aluminium producers are shrugging off record-high global energy prices, as they capitalise on cheap gas-generated electricity and a construction boom to boost world market share. Power bills account for about a third of an aluminium smelter's total costs.

"We are considering raising output to more than 1.2 million tonnes. We have already carried out the pre-feasibility study for construction of [a new line], which shows it to be extremely attractive," Ahmed Al-Noaimi said.

"Further expansion, however, is dependent on securing adequate, long-term gas supplies - negotiations for which are being conducted by the Bahraini government," he told newswire Reuters in a telephone interview from Manama.

He said Alba's board had yet to decide on the feasibility study to build a sixth production line within five years to increase production from the current 860,000 tpy.

In September 2005, Alba, one of the world's biggest smelters, launched its fifth production line, raising its output capacity by 307,000 tpy.

"Alba is also considering other opportunities for expansion through regional and pan-Arab partnerships," Al-Noaimi said.

"We are also looking into what the newly constructed Gulf power grid may offer and we are actively pursuing a number of other initiatives that will secure our energy requirements well into the future," he added.

Analysts say that the oil and gas-rich region is expected to produce 10% of the world's aluminium by 2020, up from 7%.

Alba is 77%-owned by the Bahrain government, 20% by Saudi Arabia and 3% by the German group Breton Investments.

Its only competitor in the region, state-owned Dubai Aluminium Company (Dubal) aims to be among the world's top five aluminium producers within eight years.

Dubal's expansion plans include starting construction of the world's largest aluminium smelter complex this year, which would eventually have output capacity of 1.4 million tpy. (Reuters)

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