Just 10 months after beginning commercial production, Oman Aluminium Processing Industries Limited is planning a phase of expansion to nearly treble the plant’s output. Mr PR Ramakrishnan talks to Ben Sansom about the role the company is playing in Oman’s industrial development.
Nothing is more permanent than change, or so the ancient Greek philosophers would have us believe. And certainly in today’s business world those words have a very topical ring of truth, in spite of the intervening millennia. Without the ability to spot promising changes in the marketplace and the confidence and agility to embrace change and adapt, companies stagnate and fail.
But there are two sides to every story and the other perspective on this is that changing market environments are a great breeding ground for new and vigorous companies; and when Oman Aluminium Processing Industries Limited (OAPIL) was formed in 2006 as a joint venture between Oman Cables and Oman Oil subsidiary Takamul Investment, it became just that. Today, just seven years after its launch, it is planning an expansion programme that will increase its output by over 150 per cent and take its products worldwide—and all of this was based upon perceiving an opportunity created by the changing market dynamics in the aluminium processing industry.
“Aluminium smelting is a high energy process where the major costs are in the raw material and energy. And with the low cost of energy in Oman and other GCC (Gulf Cooperation Council) states, much of the aluminium industry has been migrating from Europe to the region,” explains COO, Mr PR Ramakrishnan. “With a new aluminium smelting operation being set up here at Sohar, called Sohar Aluminium, our company was formed with the aim of developing a world-class downstream industry adjacent to the new smelter, capable of taking the liquid aluminium and manufacturing products for the local and global markets, adding value, using local manpower and nurturing local talent.”
Market opportunities across the region were very promising. The price of oil—the region’s major source of income—had been rising rapidly and government spending on infrastructure and public services was on the increase. “Countries like Saudi Arabia, Oman and to some extent the UAE were, and continue to be, investing heavily in power generation, distribution and transmission, and we wanted to participate in that growth,” Ramakrishnan says.
Once the planning and approvals had been obtained, construction of the $40 million aluminium rod mill and conductor plant began in January 2009 and was achieved remarkably quickly. Two thirds of the overall cost was invested in procuring the latest state-of-the-art rod mill plant from Southwire in the US, and the conductor plant from SKET in Germany. “Selection of these technologies has provided us with a tangible market advantage,” says Ramakrishnan. “Most power companies are seeking the lowest transmission losses across the grid. One of the ways of achieving this is through metallurgy. And Southwire, which supplied the rod mill, is a pioneer in developing high temperature alloys capable of transmitting high levels of power while retaining conductivity.” The aluminium rods that result from the process are therefore of the latest aluminium alloys. Meanwhile, the conductor manufacturing plant produces longer lengths of conductor, which delivers considerable cost savings to the industry.
Commercial production commenced in July 2010, and is already running at 93 per cent of capacity with an expected turnover this year of $120 million. Some 50 per cent of the rod mill’s 48,000 tonnes per annum output remains as semi-finished wire rods which are exported to the electrical industry in Europe and other GCC states.
The remaining 50 per cent of the mill’s output, however, continues through the conductor plant where the rods are converted into wires and stranded into conductors for electrical transmission cables. “We’re currently focusing on the local market with this product, as this is our first obligation. However, we’re going through the process of getting our products accredited with the European and UK utilities so that once local demand is fully met, we can service Europe and the UK.”
With output running at near capacity after just nine months, expansion is the obvious next step and OAPIL is working on plans to construct and install an additional rolling mill with a capacity of 75,000 tons. “This will increase our overall capacity by 150 per cent,” states Ramakrishnan. “However, any expansion of our plant is reliant upon the availability of liquid metal from Sohar Aluminium, and with more downstream aluminium projects coming online in the next few years we will be relying on the planned expansion of the smelter to keep the metal flowing. So we are linking our plans with the expansion of the smelter, and we expect a decision on this by September of this year.”
OAPIL is also keen to make an impact on the local communities. “Because other companies could come into Oman and take advantage of the low costs, our approach is to protect market share. We are an Omani company, adding value locally and nurturing local talent—currently 75 per cent of our employees are Omani,” says Ramakrishnan. “And more than that, we wanted to participate in the industrialisation of Oman.”
Training has played a major part in preparing the plant for operation, particularly as there are no other rolling mills in operation in Oman. With no knowledge base to draw on for people with operational knowledge and experience in the handling of metal and furnaces, the skills had to be provided internally. “The key thing for us was to involve the workforce from the very initial stages. We took many of the local people on up front, six months before the plant began commercial operations,” Ramakrishnan explains.
“We charted the skill sets required for each job. We identified the gaps and then filled those gaps by two methods: on-the-job training while the plant was being commissioned, and by sending people to Southwire in the US,” he continues.
Highly experienced engineers were working in the plant throughout the commissioning period, installing the equipment and controls, mapping the automation and so on, and there was constant knowledge transfer from the specialist engineers to the trainee operators. Similarly, key local operators were sent to the US to learn about best practice in terms of safety, better productivity and operations planning, and this knowledge was then brought back to Oman and transferred to the rest of the workforce.
The business is still very new, but it has already established a strong customer base in the GCC countries and Europe, based on high specification, high quality products at highly competitive prices. Nothing, however, is constant. And certainly from OAPIL’s perspective, the future will be in a significant phase of expansion that will more than double the plant’s output and provide products to markets across the globe.
