Aluminium Bahrain eyes $250m savings from 2012

Smelting company seeks annual savings after reducing workforce and increasing capacity
Aluminium Bahrain eyes $250m savings from 2012
Aluminium Bahrain is seeking to save $250 million annually from 2012.
By Bloomberg
Tue 28 Jun 2011 07:28 PM

Aluminium Bahrain, the smelting company known as Alba, is seeking to save $250 million annually from 2012 after reducing its workforce and increasing capacity.

Alba saved $100 million last year and will raise the figure to $170 million in 2011, Chief Executive Officer Laurent Schmitt said in a phone interview from Manama today. “We target an annual saving of $250 million from the end of 2012,” he said.

The company, with 870,000 metric tons of aluminum capacity a year, is seeking to expand by about 50 percent by 2015 to meet growing demand and take advantage of a 24 percent increase in prices in the past 12 months.

Alba is studying options to build a line that will produce 400,000 tons and lift the performance of two current lines, adding another 80,000 tons, Schmitt said.

“We will submit our recommendations with investment costs to the board of directors at the end of 2011 or beginning of 2012,” he said. “The ideal solution would be to do both.” A new line would take about three years to build, Schmitt said.

Demand is rising about 6 percent annually and world usage is expected to be 42 million tons in 2011, he said. “This means you need 2.5 million tons additional capacity every year so there’s a possibility for a new extension project every year.”

Aluminum producers will lift capacity in China, the biggest consumer of the metal, and in areas where energy costs are low such as the Middle East, Russia and India, according to Schmitt.

Alba is expanding European sales to 15 percent of the total in 2011 from 10 percent, Schmitt said. It opened a marketing office in Zurich to tap the European market, where demand mainly from carmakers is rising.

Alba sells 45 percent of its output to Bahrain, 20 percent to the Middle East and North Africa, and 20 percent mainly to Taiwan, South Korea and Malaysia, he said.

The company, which grew sales volumes 8.2 percent in the first quarter from a year ago, will achieve higher output and sales this year, Schmitt said, declining to forecast the gain.

Alba is the world’s ninth-largest aluminum producer by output, according to London-based researcher CRU. It produced 864,000 tons last year, according to CRU.

The company employs about 2,700 workers, down from 3,000 in 2009, and is selling more-profitable products, he said.

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