DOHA, Qatar-Emirates Global Aluminum expects to spend about $400 million to restore production early next year after an Iranian missile-and-drone attack in March shut a major smelter, as regional businesses navigate the fallout of a war that is adding pressure on the global economy.
EGA, one of the world's largest premium-aluminum producers, said Wednesday that its Al Taweelah site located in Abu Dhabi sustained significant damage in the attack on March 28, forcing an emergency shutdown of operations. The site includes a major smelter and an alumina refinery that supplies the smelter.
The company has begun restoring production at Al Taweelah and expects hot-metal production to gradually return to pre-attack levels in the first quarter of 2027, with the restoration expected to cost about $400 million, EGA said while reporting its first-half earnings.
Outgunned militarily after war with the U.S. and its regional allies started on Feb. 28, Iran sought to raise the economic and political costs of the conflict by targeting population centers, energy infrastructure, industry and airports in Arab Gulf countries. The U.A.E. suffered the brunt of those attacks.
Iran also effectively shut the Strait of Hormuz through which about a fifth of the world's oil supply flowed, sending crude prices soaring. Diplomatic efforts continue to reopen the waterway but the disruption has increased logistics costs and complicated imports of raw materials while forcing manufacturers to adapt their supply chains.
Aluminum prices climbed to a multiyear high early in the war amid concerns over prolonged disruptions to global supplies. The Middle East accounts for about a tenth of global aluminum output and relies heavily on the strait to export the metal and import raw materials needed for production, with key producers including Saudi Arabia, the United Arab Emirates and Bahrain. About one-fifth of U.S. aluminum imports come from the Gulf.
The conflict also disrupted EGA's logistics, temporarily halting new outbound shipments from the U.A.E. in March. The company has since established alternative export routes through ports outside the Strait of Hormuz, allowing shipment capacity to gradually increase and domestic inventories to decline.
EGA said a return to pre-incident shipment levels currently depends on the reopening of Hormuz, although alternative corridors are expected to reduce its reliance on the waterway over the longer term. The company has also secured inbound raw-material supplies to support operations at Jebel Ali and the restart at Al Taweelah.
Chief Executive Abdulnasser Bin Kalban said the first half was the most challenging period in EGA's history, but the company continued making customer deliveries despite significant logistics challenges.
The company said it recognized a $197 million impact related to the Al Taweelah incident in the first half. Reported net income amounted to $473 million for the period, while EGA's adjusted net profit was up 34% on year at $670 million.
EGA's revenue fell 10% on year to $3.69 billion in the first half due to lower sales volumes following the incident at Al Taweelah, partially offset by higher realized aluminum prices.