Size does matter, at least, in the world of aluminium smelting and, according to Khalid Al Rumaihi, the chairman of Alba, one of the world’s largest smelters, the potential business combination it is exploring with Saudi Arabian Mining Company (Maaden) could reshape the global aluminium industry.
Addressing a media roundtable at Alba’s massive 1.62 million metric tonnes per annum (mtpa) smelter, a day after it was announced that the two sides had signed a non-binding agreement to commence due diligence towards the combination, Mr Al Rumaihi expressed enthusiasm for the potential deal.
“We see tremendous potential,” Mr Al Rumaihi said. “It will create economies of scale, positioning the combined entity among the top six or seven aluminium producers globally.”
Highlighting some of the strategic advantages it would bring, the chairman said the merger would offer Alba significant benefits, including secure access to bauxite and alumina, key raw materials, and the potential to produce green aluminium using Saudi Arabia’s vast solar resources.
One of the most significant benefits of the merger lies in Maaden’s ownership of the Al Ba’itha Mine, which produces five million tonnes of bauxite annually. This would provide Alba with a secure and cost-effective supply of the essential raw material. Additionally, the Maaden Refinery, the Middle East’s first alumina refinery, would further strengthen Alba’s vertical integration.
Mr Al Rumaihi emphasised the potential to produce ‘green aluminium’, a growing demand in Western markets. “Having access to clean energy, such as solar power, gives us significant benefits in terms of pricing and market access,” he stated. Saudi Arabia’s vast solar potential offers a promising avenue for the combined entity to produce environmentally friendly aluminium.
Beyond the economic advantages, the merger would also strengthen the relationship between Bahrain and Saudi Arabia. Mr Al Rumaihi noted that the combined company would benefit from the growing markets in both countries, particularly in sectors like aerospace, automotive and, in particular, electric vehicle manufacture.
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While the due diligence process is expected to take several months, Mr Al Rumaihi expressed optimism about the potential for a successful merger. The combination of Alba and Maaden could not only reshape the global aluminium industry but also contribute to the economic growth and development of both Bahrain and Saudi Arabia.
The deal, if it successfully passes all due diligence, could pave the way for further business consolidation and partnerships between Gulf states, offering them a more competitive advantage when it comes to global challenges from powerhouses such as Europe, the US and China.
It could also give added impetus to proceed with the rail and bridge building projects aimed as connecting the friendly countries in the region.
Alba chief executive Ali Al Baqali was also present.
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