Qatalum to lose $585m if smelter remains out of action

30 August 2010

The $5.7bn smelter could lose six months of production due to power cut

The $5.7bn Qatar Aluminium (Qatalum) smelter could lose revenues of up to $585m if it remains out of service for six months.

The figure is based on the 585,000 tonnes-a-year facility losing six full months of primary metal production and with aluminium prices staying at the current level of around $2000 per tonne.

A power cut occurred at the smelter in August and caused a loss of temperature that resulted in 444 metal producing cells in operation to lose temperature. The loss of temperature caused molten metal to solidify thus making production impossible until the pots are cleared and restarted (MEED 26:8:10).

A Gulf-based expert believes that Qatalum should ask UAE’s Dubai Aluminium (Dubal) for assistance in getting its smelter operational.

“Dubal had a similar incident back in 2008, but it managed to get back within two-and-a-half months,” the expert says.  “Qatalum should speak to Dubai because there can’t be many smelters worldwide that lost so many potlines and got back so quickly.”

“I’m sure if they approach the appropriate people at Dubal then there will be experts available to help them out,” he adds.

Independent experts believe that Dubal lost around 50,000 tonnes of primary metal production, which equates to around $100m in lost revenues at today’s aluminium price.

Marco Georgiou, London-based aluminium analyst at Cru also tells MEED that if Qatalum cannot bring in enough metal to its cast house, which is still operational, then there might be a rise in global billet prices.  

“A lot of Qatalum’s billet is aimed towards the US market,” Georgiou says. “If they cannot maintain production then this could lead to some tightness in the billet market and spike up prices.”  

Georgiou adds that primary aluminium prices are not likely to rise in the short term due to a global surplus in supply.

Qatalum is a 50/50 joint venture between Qatar Petroleum and Norway’s Hydro.

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