Bahrain: Aluminium Giant Uses Downturn To Plan Global Expansion
Aluminium Bahrain (Alba) is using the current economic downturn to explore ways of tapping new markets across the globe and gearing up to meet a rise in demand which the company’s Chairman, Mahmood Hashim Al Kooheji, hopes will take place within the next five years.
Speaking exclusively to Oxford Business Group (OBG), the global publishing, research and consultancy firm, Al Kooheji remained upbeat about long-term prospects for Bahrain’s aluminium giant, despite the impact of global market conditions.
“We have the opportunity now to complete improvements and modernisation so that we’ll have the capability and capacity to meet the rise in demand that we envision,” he said. “I suspect that by 2014, there will be a shortage of aluminium and prices will be driven up, so we need to expand while we have a window of opportunity.”
Although the rate of demand is rising fastest in the Far East, Al Kooheji said he was keen for Alba to explore initiatives that would help the company expand across Europe. “The biggest increases in demand are coming from East Asia, primarily China, but I feel that Europe will pick up as well,” he said. “If we can enter into a free trade agreement (FTA) with the EU, our chances of expanding in the European market will be much greater.”
Although Alba’s low operating costs provided a buffer against the immediate impact of the economic downturn, Al Kooheji admitted that the company had been forced to rethink its organisational structure to ensure it remained competitive in the long term. He explained that the marked drop in aluminium prices, brought about by the industry’s close links to the construction and automotive segments, had inevitably produced a challenging operating environment. “The price of aluminium dropped by almost two-thirds and that put a lot of producers around the world in a difficult position,” he said.
Al Kooheji pointed out that Alba has the advantage of a forty-year legacy, a global market reach, environmentally friendly production process, and the reputation of being one of the world’s safest aluminium smelters.
Despite global market conditions, however, Al Kooheji remains unfazed by the prospect of further aluminium plants opening across the Gulf Cooperation Council (GCC) states. He pointed out that competition within the sector should bring many benefits, including improved efficiency, a rise in the number of skilled workers and reductions in costs. “We account for only around 1% of total world aluminium production,” he said. “The market is large enough for increased competition.”
The full interview with Al Kooheji appears in The Report: Bahrain 2010, OBG’s forthcoming guide on the Kingdom’s economic activity and investment opportunities. The highly-anticipated report will include a detailed, sector-by-sector guide for foreign investors, together with a wide range of interviews with the most prominent political, economic and business leaders.
The Report: Bahrain 2010 will mark the culmination of more than six months of on-the-ground research by a team of analysts from OBG, assessing trends and developments in all major sectors of the economy. It will provide information on opportunities for foreign direct investment into Bahrain’s economy and will be a guide to the many facets of the Kingdom, including its macroeconomics, infrastructure, political landscape, banking and sectoral developments. The report will be available in print form or online.