EGA Grows Adjusted EBITDA By 63 Per Cent To AED4.1 Billion ($1.13 Billion) In Most Challenging Year In Decades For Global Aluminium Industry

Emirates Global Aluminium, the largest industrial company in the United Arab Emirates outside oil and gas and the world’s largest ‘premium aluminium’ producer, today reported adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (adjusted EBITDA) of AED 4.1 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.

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.

Value-added products attract higher premiums over benchmark prices than those achieved by standard aluminium and enable EGA to maximise the value of its primary aluminium production.

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 AED 5.5 billion ($1.5 billion), compared to AED 4.1 billion ($1.1 billion) in 2019. EGA continued to improve working capital, which was reduced by more than AED 1.4 billion ($370 million) in 2020 to generate additional cash, and also focused on further improving operational efficiency.

Abdulnasser Bin Kalban, Chief Executive Officer 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.

“At EGA we continue to be focused on further improving the global competitiveness of our business as a national industrial champion for the UAE.”

Lower benchmark aluminium prices and premiums led to a reduction in revenue to AED 18.7 billion ($5.1 billion), compared to AED 20.5 billion ($5.6 billion) in 2019, partially offset by 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 own 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 own 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 percent. NOx emissions are expected to decrease by as much as 58 percent.

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.

EGA implemented extensive measures to protect its workforce from COVID-19, with most roles unable to be performed from home. This included changing some ways of working and expanding EGA-administered accommodation. EGA has administered more than 155,000 COVID-19 tests on its sites in the UAE since the start of the COVID-19 pandemic. In Guinea, GAC, with much of its operations in relatively remote areas, focused on quarantine measures to protect its workforce supported by COVID-19 testing to gain access to GAC sites.

EGA began a voluntary vaccination programme at both its Al Taweelah and Jebel Ali sites in the UAE in January 2021, with over 4,500 employees so far receiving at least one dose, 66 per cent of its UAE

workforce. More than 4,000 on-site contractors have also voluntarily received at least one vaccination dose so far at EGA. COVID-19 infection rates at EGA have been on average significantly below the reported rates for the populations as a whole in both the UAE and Guinea since early in the pandemic.