Aluminium industry and measures to contain the Covid-19 pandemic in GCC countries
Most of the Gulf states took early action by testing every person coming into the country and gradually closed all the borders. They brought back GCC nationals from abroad slowly in batches rather than overwhelm the health system. There has been excellent cooperation from the public. Despite all the early measures and follow-ups, cases in the GCC countries are in the increase up to mid-April, and have not reached the peak. Economically, all commercial enterprises and schools are closed, but all the major industries remained operational. Aluminium production continued, shipping and ports are working, and logistics remains available.
What are possible general consequences for the domestic and global economy?
To minimise the economic impact, some GCC countries, like Bahrain, paid the full salaries of the national employees in the private sectors, reduced or eliminated electricity and water bills for three months. No doubt there will be huge negative economic consequences regardless of the region. The recovery will depend on how aggressive the response and how wide-reaching is going to be mainly by the developed economies.
In 2008 there was clear leadership and cooperation between the region show to revive the economy, this time, such leadership is missing, and there is no cooperation or even proper communications. As a result, there will be a different commercial and economic dynamics post Covid-19. At first, it would not be apparent, but long term will not be like what has been in the past. More protectionism, and new alliances. EU could turn this to an opportunity or end up with more fragmentation. If the EU openly and collectively admits mistakes, shortcomings and develop clear plans, it would bet stronger, but if it decides to find excuses, it will be the end of EU as we know it. EU needs less bureaucracy and more independency and engagements.
How has your industrial aluminium system, in the various segments, reacted to the emergency?
GCC smelters continue to operate full capacity, ports are working, and shippings are functioning as before. Considering that 60% of primary aluminium production is for export, the problem has been the logistical difficulties in Europe because of border restrictions between them. This has negative consequences, mainly on the downstream aluminium customers in the EU who are facing a shortage of raw materials.
How do you see the future of the aluminium sector locally and globally?
Aluminium will continue to be the metal of choice with a potential increase in demand. The long term projection for the total demand by 2050 is 150 million tons, 95 million from the primary producers and the balance from recycled aluminium. Thirty years is a long period, with the uncertainties.
Do you think that the concept of Green Aluminium will be rewarded in the coming years?
The immediate priorities are going back to the normal operation by producers and users of aluminium, especially the down streams and fabricators, who are affected most. Green aluminium can wait two to three more years.
Unfortunately, the subject of Green aluminium has been commercialised by those who currently have an advantage of low carbon electricity generation. Their priorities have been to gain more premium by trying to influence the LME and other entities under the pretext of environmental care. Which contradicts another part of their operations and the damage it causes to the environment. Like bauxite residuals, spent potlining materials and other wastes generated. Decarbonisations and environmental damage mitigation need to be comprehensive and fair. To avoid carbon leakage, advanced economies need to help emerging economies to convert to clean energy production. Today only 10% of aluminium is produced using hydroelectric electricity; the balance is gas and coal. Western countries need aluminium and will not be self-sufficient. To introduce carbon tax will only make downstream less competitive. Having said that the world needs to aim for free carbon-producing aluminium using the technologies that currently available and discover new ones. The inert anode and carbon capture technologies are among them plus improved collection and processing of recyclable aluminium.