The Scoop
Aluminium Bahrain, one of the largest smelters in the Middle East, is looking at international investments as part of its plans to boost production and secure supply chains, its chairman said.
Alba, as the firm is known, is also continuing to explore a potential secondary listing in Saudi Arabia that could involve a new share sale as part of a plan to increase its valuation, Khalid Al Rumaihi said in an interview in Manama.
The state-controlled aluminum smelter, one of the largest producers of the metal outside China, is working with China’s Shandong Innovation and alternative asset manager BlueFive Capital on a potential investment in Indonesia that would involving building a new smelter and taking ownership of a bauxite mine, Al Rumaihi said. It’s also looking at potential investments in other aluminum companies around the world, he said.
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Alba is 70% owned by Bahrain’s sovereign wealth fund Mumtalakat, with another 20% owned by Saudi Arabia’s state-controlled mining firm Maaden. It also has a 10% listing on the Bahrain stock exchange, but low trading volumes mean the company is undervalued, Al Rumaihi said. “Given the size of the company, we need much larger trading to better reflect the intrinsic value of the company,” he said.
After years of toying with the idea of a secondary listing in Saudi Arabia, which has significantly higher trading volumes than the Bahrain exchange, Alba is now getting close to going ahead with it.
“We think the timing is good now, given where prices are and the outlook for the industry, but ultimately, it is going to be a decision for the shareholders.”
The company could also revisit plans for Maaden to take a controlling share after talks last year ended without an agreement. “We couldn’t agree on the structure and the economics that we had in our discussions with Maaden, but that doesn’t mean this couldn’t be revived sometime in the future,” Al Rumaihi said. “Scale matters in this business.”
Notable
- Aluminum’s years of plentiful supply are set to end, which analysts are forecasting will lead to a spike in prices, Reuters columnist Andy Home wrote last month.
- UAE-based Emirates Global Aluminium, the biggest producer of the metal in the Gulf, is preparing for a potential IPO that could value the company at as much as $15 billion, Bloomberg reported.