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Abu Dhabi, UAEWednesday 12 December 2018

EGA signs alumina supply deal with Vietnam's Vinacomin

The aluminium producer is seeking to secure feedstock for its smelters

An Emirates Global Aluminium smelting pot at one of its operations. Courtesy Emirates Global Aluminium
An Emirates Global Aluminium smelting pot at one of its operations. Courtesy Emirates Global Aluminium

Emirates Global Aluminium (EGA), one of the world’s largest aluminium producers, has signed a three-year alumina supply agreement with Vietnamese state-owned miner Vinacomin as the UAE seeks to secure feedstock for its smelters.

EGA will receive 300,000 tonnes of alumina per year under the agreement, the first such long-term supply deal between the UAE and a Vietnamese alumina producer, EGA said in a statement. It didn’t say when the company will start receiving alumina from Vinacomin.

Alumina, which is the feedstock for aluminium smelters, is sourced from bauxite. EGA currently imports all the alumina it uses in aluminium production.

“This agreement with Vinacomin is in line with our strategy to diversify our sources of supply for alumina, to secure the resources that the UAE’s aluminium industry needs to grow at competitive prices,” said EGA chief executive Abdulla Kalban. “We hope to develop our relationship with Vinacomin further in the future.”

EGA, which was created in 2013 through a merger between Abu Dhabi’s Emal and Dubai’s Dubal, is developing a US$1 billion bauxite mine and other facilities in Guinea to secure the supply of the raw material for its $3 billion alumina refinery facility currently being built in Al Taweelah, Abu Dhabi. Once fully operational, the refinery, the first in the UAE, will produce 2 million tonnes of alumina per year, meeting 40 per cent of EGA’s needs.

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EGA is jointly owned by Abu Dhabi strategic firm Mubadala Investment Company and the Investment Corporation of Dubai, the emirate’s sovereign wealth fund. It produced 2.5 million tonnes of aluminium in 2016, up 4.2 per cent from 2.4 million tonnes in 2015.

Vietnam is estimated to hold the world’s third-largest bauxite ore reserves after Guinea and Australia.

“Although Vinacomin's alumina just entered the world alumina market four years ago, it has been accepted by world-class customers, such as EGA.... as expressed by the signing between Vinacomin and EGA,” said Vinacom’s chief executive Dang Thanh Hai.

“For Vinacomin, this agreement is in line with the direction of the Ministry of Industry and Trade of Vietnam, to contribute to promoting cooperation between Vietnam and the UAE.”

EGA, which is preparing for a public float next year, plans to start commercial production of bauxite from the Guinean mine in 2018 and will later ramp up production to 12 million tonnes per year. Guinea has about 7 billion tonnes of bauxite resources, accounting for more than quarter of the global total.

EGA’s 2016 net profit rose more than 10 per cent to Dh2.1bn thanks to record production and cost cuts.