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Slowdown signs - Sohar Aluminium expansion plans on hold

Reuters reported that Oman's Sohar Aluminium has put the phase-2 of its plant on hold for now as the company assesses prospects for the metal. Sohar Aluminium, a USD 2.4 billion JV located in Oman's Sohar industrial port, completed the phase-1 of the project in February and is operating at full production capacity of 360,000 tonnes per year. Mr Bruce Hall CEO of Sohar Aluminium said that "However with regards to our phase two expansion plans which will add another 360,000 tonnes to our capacity, we still don't have a set timeline for that." Mr Hall said that "We just started operating at full capacity a few months back so we will wait and see how the market reacts."

He said that like many commodities, the price of aluminium has fallen sharply in the global downturn. Since 2008 prices have dropped more than 50% to around USD 1450 per tonne from USD 3300. Mr Hall said that "Let's just say we are not going to be making the amount of revenue that we would have hoped for but we have no plans to cut our production." He said that individual shareholders had told him they wanted to go ahead with phase-2.

He added that around 60% of the existing plant's production is used for downstream industries while the remaining 40% will be sold by Rio Tinto Alcan to markets in the Far East. Mr Hall said that "So we don't really have a direct relationship with the consumers. All the production is sold as part of the Rio Tinto marketing monster.” He said that "At this point it's just going to be the survival of the fittest and I do expect a number of companies not only in the region but on a global level to cut production."

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