Alba tightens belt over falling aluminium prices

15/01/2016 08:26 AST

Alba is bracing for a tough year ahead with the price of aluminium at London Metal Exchange (LME) expected to stay low.

The company’s chief executive Tim Murray told a town hall meeting of employees at the Oasis Hall that it had netted $129.68 million in cost savings under Project Titan.

The two-year programme launched in February 2014 aimed at reducing Alba’s cash cost by $150 per tonne by this month.

Although we did not achieve that, we still reached $135 per tonne, he said.

According to Mr Murray, Project Titan was launched to ensure that Alba maintains its position as one of the leading, low-cost producers in the aluminium industry.

“Project Titan was not just a cost-cutting programme, it was also a training programme where we leverage the use of our operational excellence expertise to create the next generation of leaders from within the company.

“Given the current LME market pressures and the planned natural gas price increase over the coming years, the success of Project Titan is critical to Alba’s future,” he added.

“Despite the collapse of all-in-aluminium prices, Alba has been able to maintain its strong intrinsic performance in a challenging market.

LME prices have fallen from $1,900 early last year to around $1,450 a tonne last month and the company needs to gear up for the price to be around $1,300 for a sustainable business model, said Mr Murray.

Alba reported a 70 per cent fall in third-quarter net income last year due to the slump in prices.

“We have to improve efficiency and optimise resource utilisation,” he added.

Construction of Alba’s $3.5 billion sixth potline is set to begin this year with metal production expected by January 2019.

Mr Murray said the project will boost the smelter’s annual output by 514,000 tonnes to 1.45m tonnes a year.

It will also make Alba the largest single-site aluminium smelter in the world, he added.

“One of the biggest industrial projects in Bahrain, the line 6 expansion project is expected to have a big impact on the economy and new job creation.

“It is estimated that 500 new jobs will be created in Alba and an additional 2,000-3,000 jobs in the downstream aluminium industry will also result from the expansion.

“Also, at least 50pc of the new metal production is expected to be sold to existing and new Bahrain downstream customers,” he added.

Gulf Daily News