- Negotiations were halted in January
- CEO: ‘Depends on priorities of both’
- Alba profit down 65% in 2nd quarter
Aluminium Bahrain (Alba) is considering resuming merger talks with Saudi Arabia’s minerals and mining giant Ma’aden, the company’s CEO said on Tuesday.
In January the two companies announced that they had ended negotiations over a merger with Ma’aden’s aluminium division.
The following month Ma’aden – formally the Saudi Arabian Mining Company – completed its purchase of a 21 percent stake in Alba from Saudi Basic Industries Corp. Both Sabic and Ma’aden are ultimately majority-owned by the Saudi government.
“It depends on the priorities of both companies,” Alba chief executive Ali Al Baqali told an analyst call on Tuesday when asked whether the merger talks could resume within the next 18 months.
“The discussion was stopped, but maybe in the future this discussion will be initiated,” he said. “I don’t have a timeframe for that, but it depends on both companies [and] what their strategic vision would look like in the future.”
Baqali rejected the idea of an Alba tie-up or joint venture with Emirates Global Aluminium, or an investment from the UAE company. “We don’t have any discussion with EGA at this stage,” he said.
Aluminium, found in products from cans to EV batteries, is extremely energy-intensive to make. Production of 1 tonne requires about 14,000 kilowatt hours, which is roughly equivalent to the power consumed by the average UK household over one year.
The GCC’s ample energy sources and its location at the crossroads of global trade give it a competitive advantage in the industry.
But Alba, which is 69 percent owned by Bahrain’s sovereign wealth fund Mumtalakat, reported tumbling earnings this week.
The company’s second-quarter net profit was BD24.6 million, down 65 percent on Q2 2024 as costs rose faster than revenue.
Prices of alumina, the raw material from which aluminium is made and the main revenue cost, rose year on year. Yet London Metal Exchange aluminium prices, the global benchmark, averaged $2,447 per tonne in the second quarter, down 3 percent versus a year earlier, Alba estimates.
“Near-term LME prices are projected to range between $2,300 and $2,450 per tonne,” Alba said in its Q2 earnings presentation, adding that a recent rebound in aluminium prices was largely down to a weaker dollar.
Ricardo Fontes Santana, Alba’s chief financial officer, said a recent decline in alumina costs means “the outlook is positive for the following quarters”.
Further reading:
- Alba earnings dented by rising raw-material prices
- Ma’aden’s profit up by half as commodity prices rise
- Bahrain’s trade deficit widens as non-oil imports rise
Alba is Bahrain’s largest listed company by market capitalisation. One 10th of its shares are free float and available to minority investors on Bahrain’s bourse. They have fallen by 29 percent this year.
Al Baqali blamed this on muted trading activity, highlighting the small free float.
The stock is “illiquid”, he said. “If you compare us with peers, we are undervalued not because we are underperforming – we are performing, The problem is [with] Bahrain’s outlook and this also somehow affecting our share price.”
