DUBAI-Emirates Global Aluminium, a holding company for government-owned aluminum assets in the United Arab Emirates, is in the final stages of a feasibility study for a proposed $3 billion alumina refinery.
Should EGA proceed with the plan, the refinery will likely be built in two phases, each of which would have 20 million tons of annual refining capacity, according to a company spokesperson. It would be finished in 2017, although its potential location has yet to be determined.
The study appears to be part of EGA's ongoing effort to exert more control over its supply chain. The company, which was formed out of the merger of government-owned aluminum smelters in Abu Dhabi and Dubai last year, wants to increase its footprint in the bauxite and alumina-refining industries.
Bauxite is the raw material from which alumina is refined. Alumina, in turn, is smelted into aluminum. Having broader control over supplies can help large aluminum producers weather volatility in the markets for these materials.
EGA already owns bauxite-mining and alumina-refining operations in Guinea. Alumina refining is usually carried out near bauxite mines and subsequently shipped to smelters to be made into aluminum.
Aluminum smelting has long been seen as well-suited to the Gulf Arab countries because of their large stocks of cheap natural gas. Smelting requires large, reliable quantities of electricity, which is produced using gas-fueled turbines.
Following last year's merger between Dubai Aluminum, which began operations in 1979, and Abu Dhabi's Emirates Aluminum, which began smelting in 2009, EGA now has a production capacity of about 2.4 million tons a year.
That figure places the U.A.E. among the top five global aluminum producers but well behind China, which churned out 21.5 million tons of the metal last year, according to U.S. government estimates.
Aluminum demand has been rising in recent years as manufacturers of cars, trains and airplanes try to increase fuel efficiency by using lighter materials.
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