Bolt from the blue! Gulf aluminium producers may halt new investments in 2025

Amid the growing global demand for aluminium, Gulf producers' decision to halt fresh investments in 2025 has come as a bolt from the blue. The news came earlier this week after Mahmoud Al-Daylami, secretary general of the Dubai-based Gulf Aluminium Council, stated in an interview with Saudi Arabic daily Aleqtisadia, "I do not expect any new investments in expansions in the GCC smelters this year. Instead, they will concentrate on upgrading operational efficiency and performance, despite an expected 3 to 5 per cent growth in global output."

Image source: Sohar Aluminium

In his statement, he even highlighted that aluminium production in the six Gulf Cooperation Council countries grew significantly in 2024, reaching nearly 6.45 million tonnes.

"Production by aluminium smelters in the GCC increased by around 1.8 per cent," said Mahmoud Al-Daylami.

According to Al-Daylami, the production growth was primarily driven by the GCC smelters' focus on enhancing operational efficiency rather than expanding production lines. Additionally, they aimed to invest in local and global companies and list some of their shares on regional stock markets.

The secretary general also underscored that GCC smelters account for nearly 9 per cent of the global aluminium output.

According to the International Aluminium Institute data, the world's primary aluminium production in 2024 was 72.758 million tonnes, of which the Gulf Cooperation Council, including Bahrain, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, produced 6.257 million tonnes versus 6.217 million tonnes in 2023.

In more than six months of 2024, GCC's primary aluminium production averaged around 530,000 tonnes or more, while in the remaining four months, it ranged between 509,000 and 515,000 tonnes. The only exception was February 2024, when production fell below 500,000 tonnes.

The strengthened position of the Gulf in the primary aluminium industry is a result of its significant $58 billion investment into aluminium industries as part of the drive to diversify into non-oil sectors.

Among all the GCC countries, the United Arab Emirates is the second largest Arab economy and the world's fifth biggest aluminium producer, with an annual aluminium production of around 2.7 million tonnes, mostly contributed by Emirates Global Aluminium (EGA) with a yearly production capacity of over 2.5 million tonnes.

Bahrain is the second-largest Arab producer after the UAE, with production exceeding 1.6 million tonnes in 2024. The remaining production of GCC countries comes from Saudi Arabia's Ma'aden, Qatar's Qatalum, and Sohar in Oman.