Key trends: Capex budget cut by 35 per cent as part of urgent measures to maintain cash-flow; Hotel metal production hits new record
Sohar Aluminium (SA), owned 40 per cent by OQ – the Sultanate’s integrated global energy group – said it closed pandemic-impacted 2020 with “positive bottom-line results” despite a collapse in global aluminium prices on the London Metal Exchange (LME) last year.
The joint venture, which owns and operates a world-scale smelter in Suhar, described 2020 as an “abnormal year” that sent aluminium prices on the LME tumbling to below $1500/ton in the second quarter of the year.
“In spite of difficult market situations, SA concluded the year with positive financial results above Business Plan supported by lower cost of production coupled with an increase in production volume,” the company stated in its 2020 Sustainability Report released here on Wednesday.
It cited in this regard measures it had adopted to alleviate pressure on its cash-flow in the wake of the price collapse. “The Company had urgently taken a number of measures to keep cash-flow positive. Capex budget was reduced by 35 per cent with a proper risk assessment and rescheduling.
Controllable costs had been reviewed deeply and made significant budget cuts that touched all areas carefully without impacting safety and quality. The measures which had been taken have proven their effectiveness on the financial performance. The company had positive bottom-line results and met all financial commitments,” the company noted.
Notwithstanding the challenges posed by the constrained global economic environment, Sohar Aluminium reported record aluminium production last year. Hot metal production rose to 396,929 tonnes, up 1.64 per cent from the previous year’s tally of 390,516 tonnes. Metal purity also reached the highest level in its history at 593.08 ppm of Fe/ tonne of metal.
Commenting on the company’s overall performance last year, Eng Said bin Mohammed al Masoudi, CEO, said: “Through 2020, and despite the challenges posed by Covid-19 pandemic, both our operational and non-operational performances have witnessed steadily increasing improvements. For instance, in the health and safety pillars, we closed the year with the lowest rate of injury, and the lowest number of Significant Potential Incidents (SPIs) in our history. Also 37 per cent of our 396,929 tonnes of primary aluminium that were produced in 2020 were delivered to our local downstream customers.”
Sohar Aluminium, set up in 2004 as a greenfield smelter, is a partnership of OQ (40 per cent), Abu Dhabi National Energy Company – TAQA (40 per cent) and Rio Tinto (20 per cent). Electricity as the principal energy source for the 390,000 tonne-capacity smelter comes from a 1,000 MW captive power plant located at Sohar Port. The project also has its own dedicated waterfront berth at the port for the unloading of alumina and other raw materials.
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