Dr. Alessio Scarsella is of the opinion that access to cheap energy and petroleum coke has driven the aluminium business in the Gulf countries, while Antti Koulumies has pointed out that the Middle East countries are increasingly exploring the upstream aluminium market. To know more what they have shared about the Middle East aluminium market and its future potential, stay tuned to the interview.
AlCircle: What are the key driving factors behind the quick growth of aluminium industry in the Middle East?
AS: Aluminium is often used as a way to create added value for markets with vast energy resources that are difficult to transport. This being said, the Middle East has managed to create a whole new industrial cluster to utilize and transport its vast gas resources in a form of congealed energy which is primary aluminium and its products. The companies in the region have become true world class players on the aluminium scene. In addition to energy availability, proximity to Europe where major aluminium demand exists in the automotive, aeronautical and food industries has been another driving factor.
AK: Until Ma’aden and EGA built their alumina refineries, this development has largely been based on imported alumina, but now the region is also becoming significant in the alumina sector. Outotec has been a proud partner to the local industry throughout its existence, having supplied the first carbon plant to Dubal already in the late seventies and now most recently supporting ALBA in its line 6 project, as well as both Ma’aden and EGA alumina refineries.
AlCircle: What makes Middle East aluminium smelters some of the lowest cost aluminium plants in the world?
AS: Access to cheap energy (mostly gas) and access to petroleum coke via the vast oil and gas industry in the immediate region. There has also been good access to labour both domestically and from neighboring countries.
AK: It’s been a great story of creating value from what are essentially side products. Recently, of course, as gas has become more transportable and the industry has grown, there is more competition for these resources, to which the industry will have to respond.
AlCircle: Which countries in the Middle East, according to you, have the maximum potential to drive aluminium production and consumption?
AS: Saudi Arabia is the standout. There is a state-backed vision to diversify from the oil and gas sector into other industries including the minerals sector. This is compounded by the fact that it is the only gulf country to have access to its own bauxite reserves. This, in combination to low energy costs, will enable the conversion from Bauxite - > Alumina -> Aluminium. Although other gulf states have made significant investments in integrating their aluminium production sectors, they all lack the raw materials, those either being bauxite or alumina, resulting in offshore sourcing. On the other hand, those with abundant energy resources in whatever form will always be in a good position to produce aluminium as it still is very much an energy story. We, therefore, follow with interest some of the nuclear projects going on in the region. I also believe there will be more specialization in terms of the raw material supply where the GCC countries will start collaborating more in a cross-border fashion, e.g. with coke and alumina supply.
AlCircle: How should the Middle Eastern Aluminium industry respond to growing demands of creating more sustainable aluminium?
AK: We see our clients all around the world starting to respond to the requirements of decarbonization and improved waste management. There is the talk of creating a low carbon aluminium class to be traded on the LME, talks of inert anode technology, a need to handle red mud sustainably while also managing local emissions such as green anode plant pitch fumes, dust, and carbon. Much of the technology and practices employed in is the best industry practice, where long term sustainability is valued much more than capital savings.
When talking about the sustainability of aluminium, we should always take a global view. This means looking at the way the required energy is produced. Gas is obviously not carbon-free, but certainly more efficient than coal. In this regard, regions with hydropower can obviously claim an advantage; however, it is also a question of the opportunity cost and the efficiency in which electricity is used. Here, I think the Middle East has a great potential to also be a trendsetter and its potlines are already quite energy efficient.
While I know that there are e.g. nuclear ambitions in the region also, the key in the short term is to ensure maximum efficiency in whatever is produced. This entails minimal transport distances of raw materials (e.g. using local coke and pitch, and sourcing bauxite from as close as possible), using latest, energy-efficient pot line technology, paying attention to anode quality, to ensure the direct emissions of the Hall-Heroult process are minimized, and that there are no unnecessary voltage drops.
When looking at the petrochemical products used, using side products from oil that are “easy” to pump out obviously also reduces the specific carbon footprint of aluminium production. This is another major advantage this region has.
In addition, there are major differences in the energy efficiency of alumina refineries, and here by using latest technology, the Middle Eastern refineries certainly have globally competitive energy footprints.
AlCircle: What do you think about the inert anode, and should the Middle East invest into that?
AK: The inert anode, while certainly a welcome global technological innovation, will not only have to work at a large scale, but also match energy efficiency in the potlines of traditional pots. Otherwise, it will not necessarily be a greener solution than the existing technology in regions with a carbon-intensive energy footprint; therefore, I don’t think it will be a silver bullet to any of these questions. As said, we always need to consider not only the specific energy footprint of smelters but rather take a global view and understand how much carbon emissions can we avoid by increasing the efficiency of production and giving that specific energy source to an alternative user. In reality, the world should focus first on phasing out its most carbon inefficient sources of energy such as coal and “hard to pump” oil reserves.
AlCircle: What can you offer to help the industry in its sustainability goals?
AK: Outotec has sustainability at the heart of its mission, and this is reflected in our aluminium offering as well. At the core of our alumina offering is our tube digestion technology that we offer together with Hatch, which we have proudly supplied to both Al Taweelah and Ma’aden. This sets the energy efficiency standard for high temperature bauxite processing. Our alumina calcination technology is also a leader in energy efficiency and for example, creates negligible thermal NOx.In aluminium, where we offer carbon area and casthouse solutions, we pay a lot of attention to making sure anode quality is high, as this has a high indirect impact on the energy efficiency of the potline. Equally important is to properly clean butts and make sure recycled carbon is not wasted, but has minimum sodium content as well. This requires high automated and specialized machinery that we offer as part of our anode rod shop offering.
AlCircle: How is Outotec contributing towards creating aluminium plants of the future in the Middle East using your digital technology?
AS: Outotec is rolling out its premium digital advisors and controllers using own advanced control technology platform. Being an OEM for many technologies in the aluminium sector, we use our own technological know-how to create advanced process control systems that superimpose the standard distributed control systems of our plants. This approach allows for quick ramp up and ramp down, steady operation resulting in reduced raw material and energy requirements without compromising the operational integrity and safety aspects of our plants. Energy efficiency has been shown to improve by as much as 10%.
AK: On the carbon side, we’re working on our own proprietary digital platform that would optimize the whole chain from “coke to pot” in the production and cleansing of anodes. As said, this requires a good understanding not only of what happens in the carbon plant, but also how anodes impact the potlines, and this loop has not yet been closed by anyone in the industry, and in this sense we’re doing pioneering work.
AlCircle: Outotec has been a key technology provider in the construction of EGA’s Al Taweelah refinery. Give us a heads up on how the technology will make it one of the most energy-efficient modern alumina refineries?
AS: Outotec has had a heavy hand in being one of the key technology providers for this asset. In alumina refining, the two most energy-intensive processes are digestion and calcination, and fortunately, Outotec has provided technology on both. The digestion technology, supplied by the Hatch-Outotec Joint venture, uses proprietary multi-cell single stream jacketed pipe unit technology, making it the most energy-efficient choice of digestion for boehmitic type bauxites. The calcination technology is Outotec’s Generation 5 Calciner, which can simultaneously reach exceptional emission values whilst providing a new benchmark in energy consumption.
AlCircle: What is your outlook for the aluminium sector in 2020?
AS: The aluminium demand will continue to grow organically by 2-4 per cent per annum, the main drivers coming from the auto-aeronautical and food industries. This will not necessarily mean that aluminium prices will increase as a result of the extra demand as there is idle aluminium capacity in China. Each player in the aluminium industry will, however, continue to improve is profitability, whilst reducing its risk profile from a supply and environmental viewpoint. Alumina supply is one specific risk and currently, there is a marginal oversupply of alumina worldwide. Although there is idle capacity in China, the ramp-up time to market is indeed lengthy due to the technical challenges associated with the Bayer process. Unrelated geopolitical tensions, policy or market changes can cause the balance between alumina demand and supply to sway dramatically, as seen in the spring of 2018. This instability poses risks for primary aluminium producers particularly in regions where alumina must be imported, such as the Middle East. This threat is driving changes in the strategic thinking of the whole supply chain for all aluminium producers in the gulf region.
AK: As we know, the aluminium sector has had a relatively challenging 2019, and there are no guarantees that this would improve significantly in 2020. It depends a lot on whether demand growth will continue and if some of the supply challenges experienced in some regions will repeat or not. While the world will certainly need more aluminium, and no expansion decisions should be based on spot prices alone, I believe there’s a lot that can and is being done in improving existing production. Therefore a large part of our focus in 2020 is to improve the way we serve our customers in brownfield. To that end, Outotec has just strengthened its presence in the Middle East by nominating one of our key sales experts and leaders, Martin Zapke, to be based out of the region, and serve all smelters in the region much more intimately.