Daewoo International Signs Contract to Buy Primary Al from EMAL

Daewoo International of South Korea singed long term ingot purchase contract with Emirates Aluminium (EMAL) of United Arab Emirates to purchase 70,000 tonnes of primary aluminium in April-December. Daewoo International tries to secure the metal from EMAL stably instead of Chinese sources.

EMAL, which is 50/50 joint venture of Dubai Aluminium (DUBAL) and Abu Dhabi investment firm, MUBADALA, started the commercial operation in January. Daewoo International signed the long term contract in mid-February, according to source in Daewoo International. Daewoo International expects EMAL could be major source with better cost competitiveness and same quality as Australian metal.

South Korea imports aluminium ingot mainly from Chinese smelters. However, Chinese government increased the export tariff to 15% in summer 2008. The higher cost reduced the cost competitiveness of Chinese source reducing the export to South Korea. South Korean aluminium import from China was only 26,741 tonnes in 2009 compared with 287,000 tonnes in 2008 and the peak of 490,000 tonnes in 2005.

South Korean trading majors try to develop new stable sources including Hindalco Industries and Bharat Aluminium (BALCO) of India and UC RUSAL of Russia. For Daewoo International, EMAL is the new source other than traditional China and India while Daewoo International imports the ingot from Australian smelters through Japanese trading firm.

South Korean aluminium demand increases steadily. The primary aluminium import increased by 15.6% to 894,173 tonnes in 2009 from 2008. The demand is supported by growth of international companies including Hyundai Motor and Samsung.