Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The biggest aluminum producer in the Middle East, whose shareholders are considering an initial public offering, sees prices of the metal rising as demand gains, though it didn’t say when that increase is likely to happen.
Emirates Global Aluminium expects its full-year sales volume to be in line with 2022 even as prices have declined over the last 12 months, chief executive officer Abdulnasser Bin Kalban said in an interview Thursday. The company usually sells more of the metal in the second half of the year, Kalban said. It is focusing on containing costs to bolster margins in preparation for when the owners decide to hold the IPO.
Aluminum prices reached record levels in the wake of Russia’s invasion of Ukraine last year, which upended commodity markets by shifting trade flows and interrupting supply of energy, grains and metals. Prices have since declined, trading about 6.5% lower in London this year. Still sales of EGA’s most valuable products — including aluminum made with green energy — dropped in the first half of the year.
“We believe in the future of aluminum and we do believe that prices have some bright days ahead,” chief financial officer Zouhir Regragui said in the same interview.
Demand for new and recycled aluminum will be bolstered by the need for the lightweight metal as a component of products in the energy transition as producers try to make everything from cars, airplanes and industrial equipment more efficient and cleaner.
In the first half, EGA’s net income fell to $533 million from $1.6 billion a year earlier. Revenue slipped nearly 20% as sales of its “premium” products dropped 5%. The realized price for the company’s aluminum was $2,359 a ton, compared with $3,063 a ton in the year-earlier period.
EGA aims to invest in an aluminum refinery in Guinea where it has a bauxite mine, Kalban said, without saying when the company would build that facility. Expensive borrowing because of high interest rates and the need to source cleaner energy for the project are among issues delaying progress, he said.
The company is working to be ready to sell shares in an IPO when the owners see fit, Kalban said.
(By Anthony Di Paola)
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