Alba IPO on target

MANAMA: Alba is on target for an initial public offering (IPO) before 2010, Alba deputy chief executive Nader Almoayyed said yesterday. "In fact, the government's shares in Alba have been transferred to (government holding company) Mumtalakat, which is continuing the close partnerships with our shareholders Saudi Basic Industries (Sabic) and Breton Investments ," he told delegates at the 12th World Aluminium Conference, a two-day gathering being held at the Ritz-Carlton Bahrain Hotel and Spa.

"Neither the amount nor the timeframe has yet been set, (but) the issue is being actively discussed and I believe it will be implemented some time before 2010," he said.

Alba's other main priority is the construction of a sixth production line, which would bring total production of aluminium at the company up to 1.3 million tonnes a year (t/y) - more than half current regional capacity.

A pre-feasibility study has been conducted, and the economics of the project look sound.

The fundamentals of the global aluminium market also support the plan, said Industry and Commerce Minister Hassan Fakhro.

"Global capacity is just over 37m t/y and the global demand is just under 37m t/y and growing at around five per cent a year," he said.

"This increase in demand for aluminium is due in part to the healthy industrial growth in the emerging economies, in particular those of East and South East Asia.

"As usual, the driver of world consumption growth in commodities is China."

The increasing strength of the Bahraini financial community and local project financing facilities would also aid further expansion.

"The confidence in the aluminium industry and the country's economy as a whole is well evident from the financing structure of Alba's last expansion, namely potline five," said Mr Fakhro.

"Of the total $1.7m cost of the expansion project, only 10pc came from equity and the rest from credit financing.

"This confidence is the result of the reforms that have included all legislative and regulatory institutions and policies including our industrial, investment, and privatisation polices."

However, one key factor continues to hold back expansion plans, according to Mr Almoayyed.

"The only reason line six has not already been implemented is the unavailability of adequate gas supplies," he said.

"In this regard, the Bahrain government is already actively discussing this very issue with neighbouring counties to ensure the kingdom's continued industrial development and we know it is only a matter of time before it is concluded."