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Mubadala seeks Dubal stake in strategic move

Targets holding company with Emal to raise output to 2.5m tonnes

Image Credit: Pankaj Sharma/Gulf News
Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance and Chairman of Dubal(centre), with the media after chairing the annual general meeting of Dubal. Ahmad Humaid Al Tayer, Vice-Chairman,(right), and Abdullah J.M. Kalban, President and CEO (fourth from right), are with him along with other boardmembers.

Dubai: Abu Dhabi-based Mubadala Development Company has offered to buy shares in the state-owned industry giant Dubai Aluminium Company (Dubal) to form a holding company that includes Emirates Aluminium Company (Emal) and create a production capacity of 2.5 million tonnes annually, according to a top government official.

“Until now no percentage [of shares] was specified but I think it’s a good share,” Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Finance Minister and Chairman of Dubal, yesterday said at a press conference on Dubal’s annual results.

“They are not negotiations, but offers.”

Dubal is currently valued at $7 billion (Dh25.7 billion), according to Ahmad Humaid Al Tayer, Vice-Chairman of the company.

Dubai has been considering the possibility of selling some shares in its star assets and highly profitable companies during its debt restructuring plans. However, there are no current plans for Dubal to go public, Shaikh Hamdan said.

Commenting on Mubadala’s offer, Venkatesan Subramanian, Director of Metals and Minerals Practices at Frost & Sullivan, said: “We feel it is a strategic move for Dubai to sell assets to their own country rather than neighbouring countries.”

Mubadala and Dubal together are 50 per cent shareholders in the joint venture of Emal’s smelter development project in Al Taweelah area of Abu Dhabi.

One option is that the trio will form a holding company that aims to be the biggest aluminium and mining establishment in the world, said Al Tayer. “We are researching how to create an economic entity for aluminium production with the size of the two companies.”

Indirect advantage

If Mubadala does acquire shares in Dubal, it will also indirectly own a greater stake in Emal, making it the biggest shareholder in the new entity.

“Mubadala and Dubal continuously explore opportunities to expand their partnership in Emal locally, regionally and internationally. These ongoing discussions have always been aimed at improving the scale and standing of our national aluminium industry on the global stage. We will update the market with material developments,” a Mubadala spokesperson said in an email statement to Gulf News.

Commenting on the Mubadala offer, Al Tayer said: “The aim is that we are studying the strategic future of aluminium production,” he noted. “There is a study on how to benefit from the two factories now in UAE: Emal and Dubal. On this basis, we are thinking of how to create a company with a production capacity of 2.5 million tonnes approximately,” he said.

There is no final conclusion on the possibility of a merger between Emal and Dubal but this is a a “future strategy”, he added.

Subramanian said, “Mubadala investment would provide necessary funds for Dubal’s value-added downstream product development which is vital to ME aluminium industry as it is exporting commodity [billets and ingots] to tune of 88 per cent.”