EGA’s adjusted Ebitda grows by 63% to Dhs4.1 billion in 2020

Emirates Global Aluminium (EGA) on Tuesday reported adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (adjusted Ebitda) of Dhs4.1 billion ($1.13 billion) for 2020, a 63 per cent increase over 2019.

EGA’s smelting Ebitda margin for 2020 was 23 per cent (2019: 14 per cent), ranking amongst the best globally, the company said on Tuesday.

EGA flexed its aluminium product mix during 2020 in response to fluctuating market demand caused by the impact of the COVID-19 pandemic on world manufacturing.

However, for the year as a whole EGA maintained its position as the world’s largest ‘premium aluminium’ producer by volume, with sales of value-added products of 1.8 million tonnes or 72 per cent of total sales. EGA sold value-added products in 2020 to more than 400 customers in over 50 countries.

EGA sold 2.52 million tonnes of cast metal in total in 2020 compared to 2.60 million tonnes in 2019. The decrease was in part due to product mix, as alloying materials are not added in the P1020 casting process.

Local sales to the downstream aluminium sector that has grown around EGA into one of the UAE’s most significant industries, were 252 thousand tonnes compared to 294 thousand tonnes in 2019.

Cash generated from operating activities was up 35 per cent to Dhs5.5 billion ($1.5 billion), compared to Dhs4.1 billion ($1.13 billion) in 2019.

EGA continued to improve working capital, which was reduced by more than Dhs1.4 billion ($370 million) in 2020 to generate additional cash, and also focused on further improving operational efficiency.

Abdulnasser bin Kalban, CEO of EGA, said, “EGA delivered a significantly improved financial performance in 2020 in the most challenging year for the global aluminium industry in decades. We achieved this through product flexibility, a relentless focus on controllable costs and cash generation, and strong ramp-up performance in our new upstream projects despite the additional challenges of COVID-19.

“The recovery of the global aluminium market that began in the second half of 2020 has continued into 2021, based on the brightening world economic outlook and growing optimism about the rollout of COVID-19 vaccination. We expect benchmark aluminium prices to remain around $2,000 for 2021 as a whole.”

Lower benchmark aluminium prices and premiums led to a reduction in revenue to Dhs18.7 billion ($5.1 billion), compared to Dhs20.5 billion ($5.6 billion) in 2019, partially offset by the ramp-up of bauxite sales from EGA’s bauxite mining subsidiary Guinea Alumina Corporation.

GAC exported 9.56 million tonnes of bauxite ore, making EGA the second-largest third-party seller of bauxite in the world in its first full production year.

EGA’s Al Taweelah alumina refinery produced 1.92 million tonnes of smelter grade alumina, close to its annual nameplate capacity of 2 million tonnes in its first full year of production. Al Taweelah alumina refinery’s production was at or above nameplate capacity in each month of the fourth quarter of 2020. Al Taweelah alumina refinery supplies EGA’s aluminium smelters. As part of its debottlenecking of production and investment in high return growth projects, EGA is expanding the existing potlines at its Al Taweelah aluminium smelter by 66 reduction cells to increase production capacity by 78,000 tonnes of hot metal per year.

The expansion project is currently 60 per cent complete. Energisation of the new reduction cells, which use EGA’s proprietary technology, is expected in three phases during 2021 with all the new reduction cells in production this year.

EGA has developed its aluminium smelting technology in the UAE for more than 25 years. In 2020, EGA signed agreements that could lead to the export of its technology to Indonesia and Colombia. Construction also continued on-track at the new highly-efficient power block at EGA Jebel Ali, which includes the first use in the global aluminium industry of a Siemens H-class gas turbine. The power block is under development by JA Power & Water Co, a joint venture formed by Mubadala Investment Company and Dubal Holding. EGA intends to buy power from the joint venture for 25 years following commissioning. Full completion of the project is expected during the summer of 2021. The new power block is expected to lower greenhouse gas emissions from EGA’s power-generation and aluminium-smelting operations at Jebel Ali by some 10 per cent. NOx emissions are expected to decrease by as much as 58 per cent.

EGA’s safety performance continued to compare favourably with global industry benchmarks. There were no Lost Time Injuries - injuries leading to time off work - at any EGA operation in 2020.

In 2020 EGA’s Total Recordable Injury Frequency Rate, a broader measure of safety performance, was 1.34 per million hours worked for the UAE and Guinea combined, compared to 1.9 in 2019. According to the International Aluminium Institute, the global average Total Recordable Injury Frequency Rate in the aluminium industry in 2019 (the latest year for which data is available) was 3.9 per million hours worked.

WAM