Focus on production ramp-up, operational excellence and marketing

Our ‘mine-to-market’, low-cost aluminium value chain has enabled us to diversify and support the Kingdom’s downstream development by launching new product lines such as beverage can and automotive sheets. Though low prices continue to have a major impact, our operations are robust and we are well-placed to overcome the current market challenges. In 2016, we continued to focus on ramping up the alumina refinery, the first in the Middle East, leading to the announcement of its commercial startup on October 1, 2016.

Our 2025 strategy for aluminium focuses on extracting maximum value from Ma’aden’s new integrated aluminium operations. Our ongoing programs to achieve operational, capital and commercial excellence will help further reinforce our status as one of the lowest cost producers of aluminium, putting us in a strong position to capture global market opportunities.
Although the aluminium price slump in global markets continues, the long-term industry outlook remains strong, particularly for low-cost producers.

Ma’aden Aluminium SBU consists of three joint venture companies with Alcoa Corporation:
• Ma’aden Bauxite and Alumina Company (MBAC)
• Ma’aden Aluminium Company (MAC)
• Ma’aden Rolling Company (MRC).

Ma’aden holds 74.9 percent and Alcoa Corporation holds 25.1 percent of these mining manufacturing subsidiaries.

On November 1, 2016 we announced the transfer of Alcoa Inc.’s interest in the three joint ventures to Alcoa Corporation. This followed Alcoa Inc.’s decision to split its upstream and downstream segments into two companies:

  • Alcoa Corporation, which will operate in bauxite, alumina, energy, aluminium and cast product globally, and can sheet in North America
  • Arconic Inc., which will operate in high performance multi-material products globally.

Ma’aden believes that its aluminium operations will benefit from the fact that Alcoa Corporation’s business lines are aligned with those of the joint venture companies.
Our Aluminium SBU also has a 50 percent stake in Sahara and Ma’aden Petrochemicals Company (SAMAPCO), which produces caustic soda (CS), a feedstock for alumina refineries, and ethylene dichloride (EDC), a key feedstock for the production of plastics.

Our 2025 strategy for aluminium focuses on extracting maximum value from Ma’aden’s new integrated aluminium operations. Our ongoing programs to achieve operational, capital and commercial excellence will help further reinforce our status as one of the lowest cost producers of aluminium, putting us in a strong position to capture global market opportunities. Although the aluminium price slump in global markets continues, the long-term industry outlook remains strong, particularly for low-cost producers.

Ma’aden Aluminium SBU consists of three joint venture companies with Alcoa Corporation:

• Ma’aden Bauxite and Alumina Company (MBAC)
• Ma’aden Aluminium Company (MAC)
• Ma’aden Rolling Company (MRC).

The bauxite ore that feeds our aluminum complex in Ras Al Khair in Saudi Arabia’s Eastern Province is transported by rail from the Al Ba’itha mine in the north. The Ras Al Khair complex includes an alumina refinery, smelter, rolling mill and one of the largest recycling facilities for beverage cans in the Middle East and North Africa region.

The construction of our mine-to-market integrated aluminium value chain was completed in 2014.
In 2016, we continued to focus on ramping up the alumina refinery, the first in the Middle East, leading to the announcement of its commercial startup on October 1, 2016. The production ramp up of the rolling mill too continued through 2016.
It has also been a year of capacity building elsewhere within the business as we prepared our local and global commercialization plans in the face of strong market headwinds. We have already been promoting our products in major aluminium-consuming regions and our technical and sales teams have made significant progress in reaching out to committed and prospective customers in these markets. Ma’aden Aluminium’s Flat Rolled Products (FRPs) – sheets to produce aluminium cans and automotive parts – took the lead in those commercialization plans, along with our shaped aluminium products.

During the year, we achieved several successes in qualifying our sheets with major beverage can producers. The automotive product is undergoing a qualification process with one of the pioneers in the usage of aluminium sheet in car manufacturing. Ma’aden’s shaped aluminium product quality continues to win the endorsement of customers in highly competitive global markets.

Aluminium prices in global markets remained under severe pressure because of oversupply. Thus, although our programs of excellence led to improved operations and business performance resulting in increased production and sales, cost reduction, higher efficiency levels, optimization of systems and processes as well as cash conservation and generation, these achievements are not reflected in our profits.

These initiatives will help us meet today’s challenges, making us more resilient and better prepared for the long-term sustainability and competitiveness of our business. Within Saudi Arabia, our aluminium operations have brought in new technology, created several thousand new jobs and will continue to contribute to achieving the industrialization and diversification goals of Saudi Vision 2030.