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The Outlook for 2020 Mega Trends for

the Aluminium Industry in Middle East –

What would drive growth for the

Aluminium Industry in 2020 in the Middle

East Region

© 2010 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.

No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan

Aluminium

Downstream

Outlook for the

Middle East

ME Aluminium Downstream Mapping

Aluminium Potential Products for Investments

Middle East Al – A Macro Perspective

Growth Workshop Prelude

Strategic Conclusion

The Aluminum Industry in the Middle East: Where it Stands

0

500

1000

1500

2000

Production Consumption Extrusion Construction

Middle East Aluminium: Metal Value Chain

23%

70% 90%

The values in red are percentage contribution of a of the previous bar

000,

of

ton

s,

2008

000

0,

To

nn

es o

f A

l P

rod

ucti

on

From 6.2% in

2007

to 15% in

2015

Aluminium Production Forecast

• The alumnium production in the Middle East is expected to grow significantly in the short to medium term

• The region is expected to contribute about 15% of the total global production of aluminium by 2015

• Middle East traditionally has been exporting a major portion of their production in primary aluminium form

• There are no significant downstream development companies in the Middle East apart from the exception of extrusion which are heavily focused towards construction industry

Al. Production Consumption Downstream End-user

� 76% of the aluminium produced in ME is

exported in the primary form.

� 85% is percentage of aluminium expected to

be exported by 2030

� 542 Billion USD is the money value of

pure energy exported every year

� 1266 Billion USD is the money value

expected by 2030

� 20 Billion USD worth of competitive

edge is being exported purely from a power

perspective

� 46 Billion USD is the competitive edge

expected to be exported, which is almost

2 times the GDP of Bahrain

� Aluminium industry in the Middle East is

challenged by three interlocking crises:

� Pure Energy Being Exported

� Minimal Existence of Downstream

� No Economic Value-add

Is Middle East Exporting Pure Energy?

The Middle East Region is Currently Challenged by the Minimal Existence of the Aluminium Downstream Industries

The GDP of Bahrain is a comparison with the 2008 real GDP

Energy

Exported

No

DownstreamNo Economic

Value-add

Frost & Sullivan’s Research Approach

Tier 1 Aluminium Products



Red Ocean

Market Place

Blue Ocean

Market Place

Products /

Markets

Products /

Markets

Competitiveness of the Market

Low High

Low

High

Gro

wth

Pote

ntia

l

Short Listing of the Viable Aluminium Product for Middle East

List of Potential Downstream Products

List of Potential Downstream Products

Blue Ocean Market

Place

Blue Ocean Market

Place

� Demand Vs Supply Gap

� Export Potential

� Feed stock & Raw Materials

� IRR

� Availability of Talent Pools

� Customer Demand

� Investment Cost

� Utilities

� Supply Chain Understanding

� Distribution Value Chain

� Selling Price

� Demand Vs Supply Gap

� Export Potential

� Feed stock & Raw Materials

� IRR

� Availability of Talent Pools

� Customer Demand

� Investment Cost

� Utilities

� Supply Chain Understanding

� Distribution Value Chain

� Selling Price

Filtering CriteriaFiltering Criteria

Microsoft Excel

Worksheet

© 2010 Frost & Sullivan, All rights reserved www.frost.com

Oil & Gas

Marine

Solar Energy

Electronics & Telecommunication

Aluminium Drill Pipes

Subsea Winches & Sail Boats

Solar Panels & Sheet Reflectors

Heat Sinks

Vehicle Armor Radar Casing Ammunition

Windshield

SurroundForged Turret Rings

Armor Plate

Aerospace & Defense

1. Widely used in CIS nations and anticipated to gain momentum in

other regions

2. Mainly used in Casing and Drill pipe in both on-shore & off-shore

applications

1. Widely used in CIS nations and anticipated to gain momentum in

other regions

2. Mainly used in Casing and Drill pipe in both on-shore & off-shore

applications

1. Special alloys plates for subsea applications such as winches

and body parts of sails

2. Small boats trend is expected to grow in next 4-5 yrs

1. Special alloys plates for subsea applications such as winches

and body parts of sails

2. Small boats trend is expected to grow in next 4-5 yrs

1. The body structure of solar panel is made of Aluminium extrusion

& thin sheet with huge market potential

2. For more efficiency of the system, single-skin aluminium with a

high-reflective laminated film are used for minimizing the loss

1. The body structure of solar panel is made of Aluminium extrusion

& thin sheet with huge market potential

2. For more efficiency of the system, single-skin aluminium with a

high-reflective laminated film are used for minimizing the loss

1. Heat sinks are extruded form of Aluminium

2. Currently, There are about 17,000 telecom towers in Middle east

region and it is expected to grow at 7% YoY

3. Usage of Aluminium in telecom drums for transmission

1. Heat sinks are extruded form of Aluminium

2. Currently, There are about 17,000 telecom towers in Middle east

region and it is expected to grow at 7% YoY

3. Usage of Aluminium in telecom drums for transmission

1. Middle East spending in military applications is expected to grow

significantly

2. Export markets such as India, Pakistan for these listed products

is expected to grow

3. Weight reduction strategies in commercial and passenger flights

will increase the usage of Aluminium in all forms

1. Middle East spending in military applications is expected to grow

significantly

2. Export markets such as India, Pakistan for these listed products

is expected to grow

3. Weight reduction strategies in commercial and passenger flights

will increase the usage of Aluminium in all forms

Aluminium For Emerging Applications


0

20,000

Supply Demand Supply Demand Supply Demand

2007 2010 2015

Domestic Imports

Key Take away

End User Applications

Competitive Landscape

Product Value Chain

Direct to End Users – 70 %

Traders / Stockiest / Distributor – 30 %

Aluminium Powder / Flakes

End-user in 2009:End-user in 2009:

�MENA local Manufacturers Capacity Utilization�MENA local Manufacturers Capacity Utilization

All figures for MENA market

2007 – 90 %

2010 – 85 %

2015 – 95 %

Explosives,

15%

Others, 9%

B & C , 76%

Mepco, India

Bahrain Atomizers

(ECKA Group)

Company NameImport Focus & Local demand

Explosives, Automotive, &

Construction

Industrial & Construction,

Automotive

End User focus

Emerging Applications

Total Available market 2010

Light Weight /Aerated concrete Blocks,

Automotive Break linings, Powder Coating,

Refractories, Aluminium Soldering & Rocket Fuel,

Explosives

14,000 MT

Break Lining

Light weight / Aerated

Concrete Blocks

Applications

$ 800 to

1050

$ 700 to

950

Premium

on LME

Demand Supply Scenario – Powder, Paste, Flakes

Employment Opportunities: 40 to 60

Automotive & Industrial growth are the main driver of this market

• For Light Weight Concrete Blocks the Consistent growth rates in Construction sector in MENA is a Key Growth Driver

• Aerated Concrete blocks is an emerging application produced from Aluminium flakes

• Explosives and Pyrotechnic segments are emerging applications in Aluminium Flakes.

• Key Export Destinations: India, Turkey, Indonesia, Malaysia, Europe(EU27), Far East, South America & North America.

Investment Levels: 6 to 8 Million

CAGR 7 %


Key Take away

End User ApplicationsGlobal End User Attractiveness in MENA


Product Value Chain





2007 – 90 %

2010 – 85 %

2015 – 95 %

Mepco (Export)

Bahrain Atomizers

(Export)

Company Name Export Potential

Automotive, Industrial & Paint

Industry

Automotive, Industrial, Paint

Industry

End User focus

Emerging ApplicationsMetallic Paints, Silver Paints, Industrial Coatings,

Corrosion preventing paints, Printing Inks

Printing Inks

Industrial Coatings

Applications

$ 700 to

1050

$ 800 to

1100

Premium

on LMEAutomotive

, 35%

Industrial

coatings,

30%

Others, 5%

Paint &

chemicals,

30%

Automotive & Industrial growth are the main driver of this market

• Every Metallic / Silver painted Car has Aluminium Paste & Pigments coated substances

• Leafing and Non Leafing substances are created using Aluminium Paste

• Industrial Coating is a Major Segment for the market growth

• Along with the Construction boom the Paint Industry would be another major driver of the market for Aluminium Paste usage.

• Countries like Saudi Arabia, UAE, Egypt have a huge potential to establish Automotive plants in the region, if so in the medium term the demand for Aluminium Paste could further rise.

• Key Export Destinations: India, Indonesia, Malaysia, Spain, Belgium, UK, Far East,



Growth Rates

Export Potential

Low Medium

LowM

ed

ium

High

Industrial Coatings

Paint & Chemical

1

23

2

2007 2010

3 Automotive

4 Others

1

4

2015

Aluminium Paste


Global End User Attractiveness


Product Value Chain



Aluminium Foam (From Al Powder)

AutomotiveAVL Metal Powder

Alu Light International

GmbH

Company Name Export focus

Aerospace & Defense, Automotive,

Building & Construction

End User focus


Energy Absorber, Weight Reduction, Design and

Architecture, Acoustic Noise / Resonance /

electromagnetic reduction, Filling material for

hollow structures, Heat resistant structures,

Powder Metallurgy Extrusion Technology.

Demand Supply Scenario

Key Take away

Increased usage of Light weight components is a key driver in Automotive and Building & Construction Segments.

• Key Export Destinations: India, Malaysia, Thailand, Spain, France, Italy, Belgium, Brazil & USA & Canada.



0

3,000


2007 2010 2015

Domestic Imports

CAGR 20 %

Growth Rates

Export Potential

Low Medium

Low

Me

diu

m

High

High

Aerospace & Defense


1

2 3

2

2007 2010 2015

• Increased Usage of Aluminium Foam in Automotive and Building & Construction Sectors.

• Weight reduction strategies in Aerospace and Defense Applications with a high usage of aluminium foam.

3Automotive

4 Others

1

4


Others Include Industrial, Chemicals etc


0

200,000


2007 2010 2015



Product Value Chain



Aluminium Foil (From Sheet) - (Consumer Packaging)



2007 – 75 %

2010 – 85 %

2015 – 95 %

Cointainer

Foil, 25%

Lid Foil,

10%

Foil Wrap,

20%Others, 1%

Converter

foil, 35%

Consumer Foils, Converter Foil,

Container FoilsHindalco (Europe & India)

Consumer Foils, Container Stock,

Lid Foils Chinese Players

Garmco

Company NameLocal Demand & Import Focus

Consumer Packaging, Converter

Foils, Lid Foils etc

End User focus

Emerging ApplicationsAluminium Foil Lids, Converter Foils, Container

Foils.

Container Foil

Converter Foil

Applications

$ 750 to 1000

$ 1100 to 1200

Premium on

LME

Demand Supply Scenario (Total Foil Market)

Key Take away

Increase in consumer spending power is the major driver of the MENA market

• Reduction in the use of Plastics in packaging coupled with Government encouraging the use of aluminium foil is the major growth driver.

• FMCG growth due to higher disposable incomes and increased consumer awareness is a Key driver.

• Key Export Destinations: India, Turkey, Indonesia, Malaysia, Belgium, Romania, Far East



CAGR 10 %





Product Value Chain



Aluminium Foil (Industrial)




2007 – 75 %

2010 – 85 %

2015 – 95 %

Others, 5%

Commercia

l, 40%

Industrial,

45%

Heat Exchangers (Fin Stock)Chinese Players

Heat Exchangers (Fin Stock) Hydro (Malaysia &

Europe)

Hindalco (Malaysia)

Company Name Import focus

Heat Exchangers, Duct Foil (Fin

Stock)

End User focus

9%CAGR (2010 to 2015)


Total Available market 2010

Foil for Heat Exchangers (Fin Stock)

17,0,00 to 22,000 MT

Duct Foil for

Commercial Air

conditioners

Heat Exchangers

Applications

$ 850 to 1050

$ 800 to 1000

Premium on LME

Key Facts

Key Take away

Increase in Commercial Offices coupled with Industrial boom

• Industrial boom coupled with heavy usage of air conditioners due to the tropical climatic nature of MENA region is a key driver

• Rapid Industrialization and commercialization is a key driver to growth, key countries could be UAE, Saudi Arabia, Egypt & Iran

• Key Export Destinations: India, Turkey, Indonesia, Malaysia, Europe(EU27), Far East,




Product Value Chain



Aluminium Foil (Pharmaceutical)


� MENA local Manufacturers Capacity Utilization� MENA local Manufacturers Capacity Utilization

2007 – 75 %

2010 – 85 %

2015 – 95 %

Others,

20%

Blister

Foils

Printed,

35%

Blister

Foils, 45%

Pharma Blister FoilsChinese Players

Pharma Blister FoilsHydro (Malaysia &

Europe)

Hindalco (India, Germany)

Company Name Import focus

Pharma (Blister Foils), Pharma

Coated & Printed Blister Foils

End User focus

CAGR (2010 to 2015) 6 to 7 %

Blister Foil Coated

Blister Foil

Applications

$ 950 to $ 1100

$ 870 to $ 1030

Premium on

LME

Key Facts

Key Take away

Increase in Pharmaceutical products and increased awareness about health is a Key driver

• Pharmaceutical boom is witnessed in Saudi Arabia, UAE, Jordan & Egypt

• Blister foil is a major application in Pharmaceutical and does not have any threat of replacement

• Emerging economies would demand Pharmaceutical foils due to the Medical industry boom.

• Recycling properties of Aluminium foil is more eco friendly.

• Key Export Destinations: India, Jordan, Turkey, Indonesia, Malaysia, Thailand, Spain, France, Italy, Belgium, Far East,

Aluminium Blister Foils

Blister Foils Coated

Blister Foils Colour coated

Blister Strip Foils

MENA Fast Moving Applications

Key Markets in MENA UAE, Saudi Arabia, Egypt, Jordan & Iran


0

20,000


2007 2010 2015

Domestic Imports

Key Take away

Product Value Chain

Aluminium Light Reflectors (From Sheet)


Residential,

16%

Commercia

l, 14%

Others,

14%

Outdoor,

26%

Industrial,

30%


Internal Lighting reflectors, Preanodised Aluminium reflectors

for mirror optic Luminaries, Retrofit lighting Systems,

Reflectors for street lighting and urban design, Spotlights,

Solar reflection, Reflectors for Halogen Lamps

Aluminium solar Reflectors

Aluminium Reflectors used in

Automotive lights

Aluminium Reflectors in Lights

Fast Moving Products



Industrial, Residential and Commercial are the key drivers of this market.

• Increased use of Aluminium reflectors in Industrial and commercial for lighting purposes is the biggest driver.

• Aluminium acts as a tremendous lighting agent for reflection

Key Export Markets: Europe (EU 7), North America, Turkey, Far East, Malaysia, Japan, Thailand, Korea, Indonesia, India

Investment Levels: Below 50 Million

CAGR 12 %

** Others include: Lighting in Medical , Stage & Automotive

Growth Rates

Export Potential

Low Medium

Low

Me

diu

m

High

High

End User Attractiveness

Residential

Outdoor

Commercial

Industrial

Others

1

2

3

4

5

5

4

3

1

2

2007 2010 2015






0

20,000


2007 2010 2015

Domestic Imports

Key Take away


Aluminium Polyethylene Composites (From Sheets)


Outdoor,

30%

Residential,

55%

Industrial,

45%


Expected CAGR (2007 to 2015)

Nano Aluminium Composite Panels,

Exterior Series of Aluminium Polyethylene

Composites, Interior Composites panels,

Sign Boards series.

7 .5 Percent

Exterior Series of Aluminium

Composites

Nano Aluminium composites

Products for Export Potential



Building & Construction is the biggest driver of the market.

• Increased usage of Aluminium Polyethylene composites in the Building and Construction end user segments.

Investment Levels: Below 50 Million

CAGR 7.5 %

Growth Rates

Export Potential

Low Medium

Low

Medium

High

High

End User Attractiveness

Residential

Commercial

1

21

2

2007 2010 2015

Product Value Chain




2 Outdoor

3Key Export Markets: India, Spain, Italy, Germany, USA, Brazil, Turkey, Far East, Malaysia, Japan, Thailand, Indonesia, India


Source: Frost & Sullivan

Power & hand

tools

6.0%

Telecom

5.0%

Heavy

Machinery &

Industrial

11.0%

Others

9.0%Aerospace &

marine

9.0%

Auto Powertrain

53.0%

B&C Hardware

7.0%

Global End-user Break-up

B&C Hardware

}Growth Rates

Export

Potential

Low Medium

Low

4

6

1

Medium

High

High

3

5

2

Middle East perspective

Weight reduction strategies by Global Auto OEMS will be a key driver

• Use of Aluminium in Cylinder Block vs. gray iron-

• Use of aluminium in the piston-

• Different Material use in connecting road vs. steel

Strength

Surface Finish

Complex Shapes

Accuracy

Cost per piece

Permanent Mould

Sand Casting

Die Casting Investment Casting

High MediumLow

Source: Frost & Sullivan; ICP

Comparison of Production Methods

Investment required for Aluminium Casting-

Less than $25 Million

Aluminium Casting

Key Take Away

385,075.4

321,317.9

255,969.2

18,723.3

91,973.6 61,522.7

0

100000

200000

300000

400000

2007 2008 2009

MTPA

Imports Exports

Imports & Exports

Algeria

Syria

Turkey

Egypt

Morocco

Lebanon

Net Importer

Job Creation

50-80

Automobile Power train

1 Eu27, Far East, Turkey, Egypt, Pakistan, India

2GCC, Turkey, Pakistan, India, USA, Iran

3

4

Turkey, Germany, France, Spain, UK, Egypt

Eu27, USA, Mexico, India, Pakistan, Russia

Telecommunications

5Africa, North America, Brazil, India, GCC

1 South Africa, Italy, Spain UK, USA, Brazil

Power & hand tool

Automobile Power train

Heavy Machinery & Industrial

Aerospace & Marine


Electronics and

Telecom

6.1%

Solar & Consumer

Durables

5.1%

Heavy machinery

& Industrial

8.5%

Automotive &

Transportation

23.6% Building &

Construction

Global End-user Break-up

}

Product by Favorable Export Market

Focus on Telecom (Heat sinks), Solar (Panels) and other growing segments like Automobile, railways and aerospace

6xxx series alloys are most demanded in these end user’s array of applications, 5xxx & 7xxx series are increasingly

used in Automobile & Transport industries (especially defence & marine) for higher end applications

Source: Frost & Sullivan;

By Alloy Series

Aluminium Extrusion – Focus Except B&C

Key Take Away

287,622.0

422,049.0

492,022.0

360,405.0

544,334.0

291,503.0

0

200,000

400,000

600,000

2007 2008 2009

MTPA

Imports Exports

Imports & Exports

Qatar

UAE

Kuwait

Iraq

Turkey

Saudi Arabia

Bahrain

Egypt

Net Importer Net Exporter

Building and Construction

Automotive and Transportation

Heavy Machinery & Industrial Applications

Electronics & Telecommunications

1

2

3

4

5

Solar Applications & Consumer Durables

Eu-27, Egypt, Iran, Israel, Brazil, India

Eu27, Turkey, Egypt, India, South Korea, Thailand, Malaysia, Singapore, Russia

Turkey, Germany, France, Spain, UK, Egypt, Iran, Iraq, Pakistan, India

Within GCC, USA, Mexico, India, Pakistan, Russia

Italy, Spain, Bulgaria, UK, Germany, Austria,Africas, Argentina, Turkey, Egypt, Lebanon,

Jordan

Growth Rates

Export Potential

Low Medium

Low

3

1

2

Medium

High

4

5

High

Middle East perspective

1xxx

2xxx

3xxx

5xxx

6xxx

7xxx

High

Alloy

Series

Medium Low

Major Brands

Investment required for Aluminium Extrusion

$ 75- $100 MillionJob Creation

150-200

0

500,000

1,000,000

1,500,000

2,000,000


2007 2010 2015

Domestic Imports

Barlan

7%

Egyptalum

11%Navard Al

4%

Others

24%

Hezar Al

4%

Assan Aluminium

22%

GARMCO

28%

Source: Frost and Sullivan

(Egypt, Iran & Turkey Rolling Mills)

Value Chain

Rolling MillsRolling Mills

End-UsersEnd-Users

Service Centers

Service Centers

Investment Levels

> USD 100 million> USD 100 million

Future Potential

Products

Electronic Stampings

Condenser Bodies

Lithography

LCD & Plasma Screens

Satellite Dish

Telecom Towers

Electronic Stampings

Condenser Bodies

Lithography

LCD & Plasma Screens

Satellite Dish

Telecom Towers

Competition

Sales Price

USD 800 – 1200 over LMEUSD 800 – 1200 over LME

CAGR 8%

Flat Rolled Products

0

100,000

200,000

300,000

400,000

2007 2008 2009

Tons

Imports Exports

End-User Trends in MENA

Syria

Turkey

Egypt

Saudi Arabia

UAE

Algeria

Morocco

Europe

CIS

Far East

Net Importer Export Destinations

Employment

> 100 People (skilled & semi-skilled)

> 100 People (skilled & semi-skilled)

Low Medium High

Mediu

mH

igh


Transportation

Packaging

Electrical

Consumer Durables

Demand Supply

Value Chain

Demand Supply

Rolling MillsRolling Mills

End-UsersEnd-Users

Panel Manufacturers

Panel Manufacturers

Investment Levels

< USD 25 million< USD 25 million

Potential Products

Modular Sign Systems

Outdoor Advertising Media

Aerospace Interiors

Marine Interiors

Exhibition Stands

Vehicles

Modular Sign Systems

Outdoor Advertising Media

Aerospace Interiors

Marine Interiors

Exhibition Stands

Vehicles

Competition in MENA

Selling Price

USD 1000– 1300 over LMEUSD 1000– 1300 over LME

CAGR 12%

Aluminium Composite Panels

Saudi Arabia

UAE

Europe

India

Far East

Net Importer Export Destinations

Employment

< 50 People (skilled & semi-skilled)

< 50 People (skilled & semi-skilled)

(From Alcan)

0

50,000

100,000

150,000

2007 2008 2009

Tons

Imports Exports

Service CentersDistributors

Advantages Over Steel & Solid Aluminium

• Lightweight, extreme rigid and flat

• Weather resistant

• Good sound and thermal insulation

• Easy mach inability

• Flexibility of shapes

• Dimensionally stable

• Lightweight, extreme rigid and flat

• Weather resistant

• Good sound and thermal insulation

• Easy mach inability

• Flexibility of shapes

• Dimensionally stable

Major Applications

• Building Facades• Interior Claddings• Floor & Ceilings

• Computer/SecurityPanels

• Signage Boards • Airports

0

250,000

500,000

750,000


2007 2010 2015

Domestic Imports

mega trends aluminium

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