The Hidden Giant
Aluminium Bahrain (Alba) is one of the largest aluminium smelters in the world outside China. It produces over 1.6 million tonnes of primary aluminium annually. It is listed on both the Bahrain Bourse and the London Stock Exchange. And yet most international investors have never heard of it.
This obscurity is not a reflection of the company’s insignificance. It is a reflection of Bahrain’s limited capital markets visibility and the tendency of Gulf-focused investors to fixate on hydrocarbons, real estate, and financial services. Alba is an industrial company operating at global scale in a commodity that is essential to transportation, construction, packaging, and electronics. It deserves more attention than it receives.
Production and Operations
Alba operates one of the world’s largest single-site aluminium smelting complexes, located in the southern industrial area of Bahrain. The facility has been expanded through successive phases:
- Lines 1-3: Original smelting capacity, progressively expanded
- Line 4: Major capacity expansion
- Line 5: Further capacity increase
- Line 6: The most recent expansion, completed in 2019, adding over 540,000 tonnes per year of production capacity and making Alba one of the largest smelters outside China by annual output
The total nameplate capacity exceeds 1.5 million tonnes per year, with actual production consistently exceeding this level. Alba’s products — primary aluminium in various forms including ingots, billets, slabs, and molten aluminium — are sold to over 60 countries across six continents.
Power generation: Aluminium smelting is extraordinarily energy-intensive. Alba operates its own gas-fired power plants to supply the electricity required for the electrolysis process. The availability and cost of natural gas is therefore a critical input factor. Bahrain’s domestic gas supply, supplemented by imports, provides the energy foundation for Alba’s operations.
Financial Performance
Alba’s financial performance is driven by three primary variables:
Aluminium prices: The London Metal Exchange (LME) aluminium price is the primary revenue determinant. When LME prices rise, Alba’s revenue and margins expand. When prices fall, revenue and margins contract. This price sensitivity is structural and unavoidable for a primary metal producer.
Energy costs: Natural gas is the largest input cost. Gas price fluctuations directly affect production costs and margins. Alba’s power generation efficiency and gas supply agreements are therefore critical to profitability.
Production volume: The Line 6 expansion substantially increased production capacity, allowing Alba to capture more revenue in periods of favourable pricing. Volume is now at or near maximum capacity, meaning that revenue growth depends primarily on price rather than volume increases.
Revenue: Alba generates annual revenue in the range of several billion US dollars, depending on prevailing aluminium prices. The company is Bahrain’s largest industrial enterprise by revenue and one of the largest non-oil companies in the GCC.
Margins: EBITDA margins fluctuate with aluminium prices and energy costs. In strong pricing environments, margins are healthy; in weak environments, they compress. The Line 6 expansion improved the company’s cost position by spreading fixed costs across a larger production base.
Line 6 Expansion
The Line 6 expansion was the most significant industrial investment in Bahrain in recent years. The project added over 540,000 tonnes per year of new smelting capacity at a total project cost of approximately $3 billion.
Impact: Line 6 elevated Alba into the top tier of global aluminium smelters outside China. The expansion created thousands of construction jobs during the build phase and permanent operational positions upon completion.
Financing: The expansion was financed through a combination of debt and equity, with Mumtalakat (Bahrain’s sovereign wealth fund, 69 percent shareholder) and other shareholders supporting the capital raise.
Strategic significance: For Bahrain, Line 6 represented a commitment to industrial-scale manufacturing as a diversification strategy. The expansion increased Bahrain’s non-oil GDP contribution, generated additional export revenue, and demonstrated the kingdom’s ability to execute large-scale industrial projects.
Ownership Structure
| Shareholder | Stake |
|---|---|
| Mumtalakat (Bahrain SWF) | ~69% |
| SABIC Investment Company | ~20% |
| General Organisation for Social Insurance (Bahrain) | ~10% |
| Free float | ~1% |
The concentrated ownership — with Mumtalakat holding a supermajority — means that Alba’s strategic decisions are influenced by Bahrain’s sovereign investment priorities. The limited free float restricts liquidity and reduces the company’s profile among international institutional investors.
Why Most Investors Have Never Heard of It
Several factors explain Alba’s obscurity:
Bahrain capital market visibility: The Bahrain Bourse is one of the smallest stock exchanges in the GCC by market capitalisation and trading volume. International investors focused on the Gulf typically concentrate on Saudi Arabia (Tadawul), the UAE (ADX, DFM), and Qatar — not Bahrain.
Concentrated ownership: The approximately 1 percent free float on the Bahrain Bourse limits institutional investor interest. The London listing provides international access but has limited liquidity.
Commodity sector neglect: Gulf investor attention focuses on banks, real estate, telecoms, and petrochemicals. Pure industrial metals producers are uncommon in the GCC and fall outside the typical investment screens.
Bahrain country risk: Bahrain’s fiscal challenges and lower credit ratings relative to the UAE and Saudi Arabia create a country-risk discount that reduces investor appetite for Bahrain-listed securities.
Outlook
Positive factors: Global aluminium demand is supported by structural trends including transportation electrification (aluminium lightweighting), renewable energy infrastructure (aluminium in solar panel frames and wind turbine components), and packaging demand. Alba’s production capacity is at scale, and the Line 6 investment has already been made.
Risk factors: Aluminium price cyclicality creates inherent earnings volatility. Energy cost increases (particularly natural gas) compress margins. Environmental regulations on energy-intensive industries may impose additional costs over time. Competition from Chinese smelters — which operate at massive scale with state support — exerts pricing pressure.
Investment case: Alba is a globally significant industrial asset listed at a valuation that reflects Bahrain’s country risk and limited liquidity rather than the company’s industrial capability. For investors willing to accept the country risk and illiquidity, Alba provides exposure to a primary metal that is essential to the global economy at a valuation that may not fully reflect the company’s production capacity and long-term structural demand drivers.
The irony is that Alba — a company most investors have never heard of — produces a commodity that most investors use every day.