Qatar Aluminium (Qatalum), which seeks to limit cash cost to $120 per metric tonne by 2021, is planning to enhance revenue by focusing on selling value-added products and optimising working capital.
In its initial public offering (IPO) prospectus, Qatar Aluminium Manufacturing Company (Qamco), to which the country’s hydrocarbon bellwether Qatar Petroleum (QP) will transfer its 50% stake in Qatalum, said one the strategic objectives is to maximise shareholder returns by increasing financial returns.
Subscriptions to the QR2.73bn Qamco IPO begin today and will be on tap until November 12. Many banks have already extended financing for the IPO, which is expected to generate interests from the nationals.
Highlighting that Qatalum focuses on three areas to grow financial returns through 2022; it said there was a need to enhance sales revenue for which it intends to focus on value-added products, both optimising its existing product portfolio by concentrating on the most profitable product ranges and moving towards new, more demanding and profitable products.
On the need for optimising its ‘cash cost’ metric, the prospectus said it tracks ‘cash cost’ in US dollars per metric tonne as a key performance indicator of efficiency.
Qatalum’s operations have been ranked among the most efficient smelters in terms of cash cost in US dollar per metric tonne. It aims to continue to improve processes throughout the organisation to optimise costs.
The company benchmarks ‘cash cost’ to track its progress as it implements best practices. It utilises benchmarks to measure its performance and evaluate results. The Qatalum Improvement Programme (QIP) seeks to continuously optimise processes throughout the organisation resulting in reduced business costs.
The QIP, which began in 2013, is aimed at improving Qatalum’s cash cost by $150 per metric tonne within five years and achieved it a year ahead of schedule. At the start of 2017, Qatalum kicked-off its Phase 2 of the improvement programme with the objective of further improving its cash cost by $120 per metric tonne by 2021.
The aluminium producer has also made efforts to optimise working capital with respect to spare parts, consumables and raw materials and tracks working capital in its management reports.
Qatalum intends to assist and propose plans to, where possible, improve production capacity through enhancements to existing facilities or source additional feedstock for production.
It will pursue cost-efficient opportunities to increase output, enhance efficiency and reduce production cost, including, where possible, changes to the configuration of existing production processes.