JEDDAH, May 11 -- Five years from now, Saudi Arabia is set to become a major aluminum exporter once the three mega smelter projects worth more than $10 billion start producing nearly 2.4 million tons, the National Commercial Bank (NCB) said in a study.
At present, the Kingdom's aluminum industry is concentrated in the downstream sector, the study said.
More than 110 companies make up the sector, which processes various types of imported aluminum products to produce aluminum fixtures for construction, kitchens, cooking utensils and other aluminum-related applications, the study on Saudi Arabia's aluminum industry noted.
Diversification of the sector's downstream production portfolio will allow local manufacturers to enter new markets and increase their market share.
"Saudi Arabia is on the verge of becoming a major upstream player in the global aluminum industry.
Upon completion, three announced aluminum smelters will supply roughly 2.44 million metric tons per annum (mntpa) of primary aluminum by the start of 2016," said NCB.
"The projects, valued at around $19.3 billion, will turn the Kingdom into a net exporter, and eventual global supplier, of the metal."
The study noted several factors that drive the aluminum industry in Saudi Arabia - the ongoing program to diversify its oil-reliant economy and the abundance of cheap energy for industrial projects.
The Kingdom is also the only GCC nation to possess massive quantities of alumina, the main component in the production of aluminum.
"Many factors are driving growth in the Saudi aluminum sector. Most importantly are the government initiatives to rapidly expand the non-oil economy. Despite the tightening conditions of 2009, the real non-oil GDP grew by three percent, with the private sector in particular expanding by 2.54 percent," it said.
"The 2010 national budget includes SR260 billion for investment projects that ensure sustainable and balanced development, as well as job creation. The Kingdom has recently acknowledged its massive minerals resources, and has set goals to develop its minerals and mining sector to become the third pillar of the economy after hydrocarbons and petrochemicals."