METALS

Oman 2018 | INDUSTRY & MINING | B2B

Omani firms are taking advantage of the FTA with the US to boost exports whilst streamlining their production lines for higher efficiency at home.

Mike Otero
MIKE OTERO
CEO
Oman Aluminium Rolling Company (OARC)
Said Mohammed Al Masoudi
SAID MOHAMMED AL MASOUDI
CEO
Sohar Aluminium

How are you helping to enact Oman's Vision 2020 strategy?

Mike Otero As part of Vision 2020, Oman has invested heavily in aluminum with the construction of the Sohar Aluminium smelter. The smelter is designed as the anchor of the Sohar Metals Park and the supplier of feedstock to the downstream industries. The downstream businesses are all market companies; we provide sustainable jobs for the local workforce and pay market prices for our gas and electric usage. Indeed, the Metals Park was designed to allow Oman to capture value from the smelter. Just taking the metal from Sohar and shipping it out of the country strips all the value from the local economy and basically transfers all the value to the offtake agreement holder. With that in mind, the purpose of the Metal Park is to take the liquid metal from Sohar Aluminium, process it further in Oman, and ship that metal out in order to get in-country value. Each time the metal is turned within Oman it generates further value and further job opportunities. However, with each further use, the metal enters further into smaller niche markets where, once again, it competes on a global stage as it is ultimately exported to the rest of the world. Once OARC is up and running at full operating capability, it should be the most technologically advanced rolling mill in the entire GCC.

Said Mohammed Al Masoudi Sohar Aluminium is one of the projects that falls within the Vision 2020, given that one of the pillars of this vision is to diversify away from oil and gas. As a manufacturer in the aluminum industry, we are working on a greenfield project, which is scarce around the world, with the exception of China. The government of Oman has provided a great deal of support through infrastructure and energy provision for the aluminum industry. Since its inception, the company has worked closely with the government and other stakeholders to develop a downstream market. We seek to increase the footprint of the economic value of the aluminum industry in Oman. Now, we are committing 60% of our production to the downstream market. Furthermore, we also provide the necessary development of our employees. Our Omanization rate currently stands at approximately 75%, which is a great achievement that spans across all levels of the company.

What are your expansion plans?

MO We intend to take full advantage of the Oman FTA with the US. The US recently levied massive duties on Chinese light gauge foil material, so about a year ago, we set our sights on the North American market because of its size and low entry barriers. Thus far, everything has gone as planned; the only little hiccup has been the loss of metal from the smelter, which will slow us down six or nine months. Our main objectives for 2018 are simple: we want to break even, maximize the plant's production by the end of 2018, and get up to 10,000 or more tons. We also want to stabilize the workforce so we can start working on internal training to strengthen our technology department. On the safety side, we want to maintain our record; we have had one Lost Time Injury (LTI) in 12 months and want to be LTI free for 2018 and reduce our accident frequency ratio. Finally, we want to lower our production costs by around 5%. All in all, 2018 is about reducing costs, increasing production, achieving full capacity—and most of all staying safe.

SMAM At the moment, we produce around 390,000 tons at full production, which is slightly above the originally designed capacity of 350,000 tons. We have been at the higher end of our capacity for over two years now. In terms of size, we might be the smallest aluminum smelter in the GCC. However, Sohar Aluminium was designed and built in a way that the available land and infrastructure can be used to double production capacity. As for expansion, it will be taken forward as a brownfield project, though it will still be capital intensive. There is certainly an appetite to invest in this industry as we foresee a bright future for the aluminum industry and a progressive increase in demand. Aluminum prices are currently stable at about USD2,000 per ton. We see high demand coming from the construction sector and also export our products for the downstream sector in the GCC. Sohar Aluminium also contributes to domestic demand, to which we commit more than 50% of our products. Around 60% of our market is dedicated to Oman and the UAE, but we market ourselves to wherever there is demand.