Alba CEO Signals Possible Merger with Ma'aden

Resuming Merger Talks with Ma’aden

The possibility of resuming merger talks between Aluminium Bahrain (Alba) and Saudi Arabia’s Ma’aden has been raised by Alba's CEO, Ali Al Baqali. This comes after the two companies halted negotiations in January regarding a potential merger involving Ma’aden’s aluminium division. The discussions were paused, but Al Baqali indicated that future conversations might be possible depending on the strategic priorities of both entities.

Al Baqali emphasized that while the current discussions have been put on hold, there is potential for them to restart in the next 18 months. He stated, “It depends on the priorities of both companies,” highlighting that the decision will be influenced by their long-term strategic visions.

Al Baqali also dismissed any potential collaborations or joint ventures with Emirates Global Aluminium (EGA). He confirmed that no formal discussions are currently taking place with EGA at this stage.

Energy-Intensive Production and Market Challenges

Aluminium production is highly energy-intensive, requiring approximately 14,000 kilowatt hours per tonne. This is equivalent to the power consumed by an average UK household over a year. The Gulf Cooperation Council (GCC) benefits from abundant energy resources and a strategic location, which gives it a competitive edge in the global aluminium industry.

Despite these advantages, Alba reported a significant drop in net profit for the second quarter. The company recorded a net profit of BD24.6 million, a 65% decrease compared to the same period in 2024. This decline was attributed to rising costs outpacing revenue growth.

Alumina Prices and Market Outlook

Prices for alumina, the primary raw material used in aluminium production, increased year-on-year. However, London Metal Exchange (LME) aluminium prices averaged $2,447 per tonne in the second quarter, representing a 3% decrease from the previous year. Alba anticipates near-term LME prices to range between $2,300 and $2,450 per tonne, noting that a recent price rebound was largely due to a weaker dollar.

Ricardo Fontes Santana, Alba’s chief financial officer, mentioned that a decline in alumina costs could lead to a positive outlook for the following quarters.

Financial Performance and Share Price Concerns

Alba remains Bahrain’s largest listed company by market capitalization. However, its share price has experienced a notable decline this year, falling by 29%. Al Baqali attributed this to low trading activity and a small free float, which makes the stock illiquid.

He explained that the company is performing well but faces challenges due to broader economic conditions in Bahrain. “We are undervalued not because we are underperforming – we are performing,” he said, emphasizing that external factors are influencing the share price.

Conclusion

As Alba navigates through financial challenges and considers the possibility of resuming merger discussions with Ma’aden, the company continues to focus on its strategic goals. The future of these talks will depend on the evolving priorities of both companies and the broader market dynamics affecting the aluminium industry.