A large drop in metal prices has halved profits at Dubai Aluminium (DUBAL), a key source of cash for the emirate's economy.
Drop in metals prices cuts DUBAL's profits by half
A large drop in metal prices has halved profits at Dubai Aluminium (DUBAL), a key source of cash for the emirate's economy. It posted a profit for last year of Dh1.1 billion (US$299.5 million). The firm sold 8 per cent more aluminium on the world market after boosting production capacity, but the rise was not large enough to outweigh the drop in prices that came with the economic downturn.
Spot prices for aluminium averaged $1,671 on the London Metals Exchange last year, down 35 per cent from 2008. Most aluminium producers around the world cut production last year as demand shrank, but DUBAL swam against the tide and produced more than 1 million tonnes for the first time in its history. But the company was forced to change its output mix to products that commanded lower margins. DUBAL's contribution to the emirate's economy was underscored yesterday by Sheikh Hamdan bin Rashid, a Deputy Ruler of Dubai and the chairman of the company's board of directors. The company is fully owned by the Investment Corporation of Dubai, a government entity.
"DUBAL is providing a vital role in boosting and cushioning the national economy, and creating new job opportunities for UAE citizens," Sheikh Hamdan told DUBAL's annual general assembly, according to the state news agency WAM. Conditions are likely to improve for all Gulf aluminium producers this year as the global economy recovers, Abdulla Kalban, the chief executive of DUBAL, said on Tuesday. "We are bullish about the market for 2010, 2011. The signs are encouraging," Mr Kalban said at a conference in Dubai.
Aluminium spot prices in London have risen steadily in the past six months and reached $2,224 yesterday, up 66 per cent from a year ago. A survey of 15 analysts by Bloomberg predicted prices would remain just below current levels throughout the year. DUBAL will also see a revenue increase this year as a result of the start-up of the Emirates Aluminium smelter in Taweelah, its 50-50 joint-venture with Mubadala Development, the strategic investment arm of the Abu Dhabi Government.
The smelter produced its first metal late last year and will increase to full production of 780,000 tonnes a year in the third quarter. * with agencies @Email:firstname.lastname@example.org