Middle East key area for future aluminium production on low energy costs - Fitch |
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Wed, 29 Aug 2007 10:24
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MUMBAI (Thomson Financial) - Fitch Ratings said the Middle East is emerging as a key region for future aluminium production, driven by the availability of low cost gas power with new aluminium smelting capacity expected to be concentrated in areas such as the Middle East, Russia, Iceland and South America.Driving this growth are energy costs of an average of 20 usd per mega watt hour (MWh), which compares favourably with 28 usd/MWh in the US, and over 40 usd/MWh in China, Fitch said.Electricity typically accounts for around 25-30 pct of the total cash cost of primary aluminium production. As aluminium prices are set globally, there is limited opportunity for smelters at a comparative cost disadvantage to pass on electricity cost increases to end users, Fitch said.The ratings agency said the Middle East is forecast to have the highest growth rate in primary aluminium production over the next five years, with a doubling of its current production of around two mln tonnes by 2011.While cheap electricity costs represent a substantial advantage, Fitch said the economics of future aluminium smelter projects in the Middle East could be impacted by higher construction costs in the region and increased transportation costs to ship raw material to the region.TFN.newsdesk@thomson.comnpr/jroCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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GE Energy wins $1.8B in Mideast pacts 