Tuesday, August 5th, 2008

Another Milestone for Sohar Aluminium: Liquid Metal delivery to Downstream Customers

Sohar Aluminium achieved another milestone in delivering the first crucible of hot metal to SAG, a local downstream manufacturer of aluminium products. This event comes after the export of 21 tons of standard ingots to Hong Kong last month.

One of the key strategies for the state-of-the-art Sohar Aluminium smelter facility located at Sohar Industrial Estate is to promote the development of the aluminium industries in Oman.

“The most effective means to achieve this was the creation of downstream industries next to the smelter to encourage the development of enterprises specifically involved in the aluminium industry which would add value to the aluminium produced by the smelter for local use or export” said Chief Executive, Mr. Tony Kinsman.

“Of our annual 350,000 tons, Sohar Aluminium will export approximately 140,000 tons from Sohar Industrial Port. The remaining 210,000 tons will be sold to local companies that have been formed to create a new downstream aluminium industry. Already we have commitments for 68,000 tons per year from two downstream partners – SAG and Oman Aluminum Processing Industries Ltd (OAPIL)”.

“We also have a Memorandum of Understanding with another local company, Future Metals, to purchase 30,000 tons. All three companies will fabricate products from our liquid metal, including busbars, electrical rods, cables and conductors” he said.

The first sale of metal to a downstream customer occurred yesterday when a ladle of liquid metal was safely delivered to SAG in the industrial Park. SAG is a producer of aluminium busbars and they will be dependent upon the smelter for the supply of liquid aluminium on a regular basis.”

“The greatest benefit is achieved if the downstream customer receives the metal in liquid form to solidify into commercial products. The benefit of liquid metal supply is that it reduces the cost of production by eliminating the need to re-melt the metal before processing. This can decrease the cost of production to the downstream industry by reducing their energy requirement and preparation time, and also avoids the use of energy for the solidification process in the smelter Casthouse” said the General Manager of Commercial and Corporate Affairs, Dr. Hilal Al Hinai.

“The benefits from this synergy can only be realized if there is a strong bond between the supplier and the customers to ensure efficient coordination of the delivery interface. The smelter must be fully aware of the requirements of the customer and deliver the metal when it is required. The customer must be ready to accept the metal when it arrives to avoid any delays that might result in productivity losses in the smelter. It is necessary to maintain regular contact with our customers to ensure the interface works effectively and both parties can plan accordingly” commented General Manager, Operations, Mr. Michel Huot.

The first delivery was an opportunity to test all stages of the process, tapping, sampling, weighing, delivery, documentation and decanting, the process required coordination from Supply Chain Team, Reduction Department, Casthouse, Plant Protection and SAG.

“The transfer of the first delivery happened smoothly and demonstrated the benefit of good planning” added Casthouse Manager, Hameed Najim.

Background: The Sohar Aluminium Smelter Project is located approximately 12 kilometres inland from Sohar. Using Rio Tinto Alcan/AP smelter technology, this $2.4 billion greenfield project involves the construction of a single 360 pot AP35G aluminium smelter potline with a capacity of approximately 350,000 metric tons per year, a carbon anode plant, a metal casting facility, and a port facility for product storage and ship loading and unloading. When complete, the potline will be the largest single potline in the world.

The company celebrated the beginning of aluminium production in mid-June, and expects to reach full production by the end of 2008.

Sohar Aluminium’s shareholders are Oman Oil Company, Abu Dhabi Water and
Electricity Authority, and Rio Tinto Alcan.