Fears of escalating political unrest across the Middle East and North Africa will not put off investment in new aluminium projects in the region, industry experts say. Gulf states in particular are expected to become an increasingly important aluminium supply source as new smelters start up and others are planned. "If there is any fear from the investors side now, this will only be temporary and they will come back again," said Mahmood Daylami, general secretary of the Gulf Aluminum Council. "So far there are no signs of investors pulling out of any [aluminium] projects." The Gulf is one of the few areas, outside top producer China, where aluminium output is rising, benefiting from ready availability of cheap power for the energy-intensive smelting process. High power costs have forced the idling of a large amount of smelter capacity in the United States and Europe over the years. It was too early to say whether projects in the Middle East might be derailed, according to Olivier Masson of industry consultants CRU Group. "If the turmoil were to escalate, it could be a worry as the Middle East is one of the main growth areas outside China," he added. Daylami expects production in the Gulf states this year to total around 3.0 million tonnes, rising to around 4.0 million tonnes in two to three years when a new project owned by state-run miner Saudi Arabian Mining Co (Ma'aden) and Alcoa starts up. The Gulf produced just over 2.7 million tonnes of aluminium last year, International Aluminium Institute figures showed. Still more increases are planned or have been mooted in Saudi Arabia and elsewhere in the Gulf and Daylami sees output reaching around 5.0 million tonnes in 10 years time. There has been a lack of news on some projects, which suggests they may have faltered or fallen by the wayside. But that was the case long before the recent tensions. Meanwhile, sanctions will also likely continue to hamper earlier mooted Iranian expansion plans, analysts say. But Alcoa is pressing ahead with the giant complex it is building with Ma'aden in Ras Az Zawr on the Gulf coast of Saudi Arabia. In an interview this week, the company said it was proceeding well, but it was monitoring "what is going on on the ground." "It's going very, very well. I'm very excited about it because it's going to set a new low-cost position for alumina and aluminum," Alcoa CEO Klaus Kleinfeld said. The London Metal Exchange (LME) three-months aluminium price CMAL3 was last indicated at $2,604.50 a tonne.
