Smelter on track despite falling prices: EMAL

Emirates Aluminium (EMAL) expects the first stage of the world's largest smelter to begin production in 2010 despite falling prices and shrinking global demand for aluminium, its chief executive says. Prices have fallen from a high above US$3,300 (Dh12,120) per tonne in July to less than $1,800, but Duncan Hedditch, the company's chief executive, said the smelter in Taweelah was still on track to begin production in two years. "The project was always designed to come into the bottom quartile of the cost curve," he said. "We believed that as energy costs went up, the high cost would [close down] the high-cost producers." Alcoa, a US-based aluminium giant, has cut production at smelters in the US, and experts believe some Chinese producers will soon suspend production as losses widen. EMAL's smelter will be powered by a 2,000-megawatt power station. Mr Hedditch said the company was prepared to capture emissions from the plant's smokestack in partnership with Abu Dhabi Future Energy, known as Masdar, once a study determined the technology requirements. It would be the first smelter in the world - and one of the first industrial facilities - to attempt to store greenhouse gas emissions underground. "One of the things we decided early on was to allow for, and not design out, the possibility of carbon capture," Mr Hedditch said. "We reserved physical space in the middle of the plant for any equipment we need." Earlier this month, Masdar disclosed plans to develop an emirate-wide system by 2013 to capture five million tonnes of carbon dioxide from a hydrogen power plant, a steel plant and EMAL's smelter and pipe it into ageing oilfields to squeeze out more crude. Masdar said the scheme would reduce the emirate's sizeable carbon footprint, increase production of crude and make available natural gas that is now left in oil wells to maintain pressure. Last week, the company selected a US firm to complete front-end engineering and design on the project. Mr Hedditch said the power plant would generate seven to eight million tonnes of carbon emissions every year. An aluminium smelter, which runs a powerful current of electricity through alumina to make aluminium, requires a steady supply of power equivalent to the needs of a small city. Even with carbon capture, however, the smelter would still retain a sizeable carbon footprint. Mr Hedditch said no technology existed to capture carbon emissions from the smelting process, which produces 1.5 tonnes of carbon dioxide for every tonne of aluminium. At an initial annual production of 800,000 tonnes, the facility will emit about 1.2 million tonnes of carbon dioxide per year. Mr Hedditch said the company would explore options to "offset" the remaining carbon emissions. Companies can buy credits on a market in Europe to make up for excess greenhouse gas emissions. If EMAL goes ahead with carbon capture, it may well achieve Mr Hedditch's announced intention to build the world's cleanest smelter. In April, the firm announced it would install sulphur dioxide scrubbers at the smelter, which would make the facility one of a handful worldwide to remove the gas from emissions. Carbon capture would make the facility's power source as clean as smelters in North America and Iceland, which are powered by hydroelectric dams. The facility will become the largest of its kind in the world if the company decides to go ahead with a planned expansion to almost double capacity to 1.4 million tonnes per year. Mr Hedditch said recent media reports that the expansion had been put on hold were "just plain wrong", although the company's board still had to come to a decision next year, pending the results of a feasibility study. cstanton@thenational.ae