Alba seeks raw materials as Strait of Hormuz is off limits

• One month of raw materials left
• Exploring alternative import routes
• Maaden is sending alumina

Aluminium Bahrain has about one month’s worth of raw materials at current operating rates as it works to manage supply chain disruption caused by the Iran conflict.

The company, which runs one of the world’s largest aluminium smelters, declared force majeure on March 4 after the effective closure of the Strait of Hormuz prevented shipments to customers and disrupted inbound supplies of alumina, a key feedstock.

Force majeure is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, prevents one or both parties from fulfilling their obligations under the contract. 

Chief executive Ali Al Baqali said the company is exploring alternative import routes to extend its inventory buffer. “We have almost one month’s consumption at this stage, but we are looking at other channels to extend that period,” he said during a webinar on Wednesday.

Alba has begun rerouting exports via road and sea, avoiding Hormuz, and has also shipped material through Egypt by air. Additional options under consideration include the Port of Sohar in Oman, said Al Baqali.

Bahrain Mumtalakat Holding Company owns 69.38 percent of Alba, while Saudi Arabian Mining Company (Maaden) owns 20.62 percent. Alba and Maaden had previously been involved in failed merger talks.

Al Baqali said Maaden was helping with raw materials with one shipment of alumina already received and a second en route. “We are also in discussion of the third shipment,” he said.

Further reading:

• Hormuz supply squeeze lifts jet fuel prices to 10‑year high
• Fujairah’s importance grows with each day Hormuz remains closed
• Oil seeps from the strait but returning full flow is not easy

Earlier this month, Alba shut down Reduction Lines 1, 2 and 3 – equivalent to about 19 percent of its 1.6 million tonne annual capacity – to preserve operational stability. Restarting the lines would take at least three to four months, Al Baqali said, adding that further curtailments remain under review depending on supply conditions.

“Definitely, our strategy is to go by inefficient spot lines. We close Line 1 to 3. If necessary in the future, then we will look at Line 4,” he said.

The Middle East produces about 9 percent of the world’s aluminium, a vital industrial metal used in construction, transport and renewable energy.

The benchmark three-month aluminium on the London Metal Exchange closed at $3,400 a tonne on Tuesday.

In February Alba said net profit rose to BD218.7 million ($582 million) from BD184.5 million in 2024, as total income jumped 16 percent year on year to BD213.2 million.

Shares of Alba were up slightly on Thursday at BD0.017.