As the European Union prepares to impose carbon tariffs through its Carbon Border Adjustment Mechanism (CBAM) in 2026, Gulf states are racing to enhance their low-carbon metals manufacturing capabilities. The Gulf Cooperation Council (GCC) currently accounts for 10% of global aluminum production, with nearly a third of this output exported to the U.S. and EU markets. Aluminum production is responsible for approximately 3% of global industrial CO2 emissions, prompting GCC nations to innovate in cleaner production methods. The United Arab Emirates (UAE) leads the region, producing 44% of the GCC's aluminum, with Emirates Global Aluminium (EGA) at the forefront of solar-powered aluminum production initiatives. [3151bab6]
In addition to aluminum, the GCC is also focusing on green steel production, with Emirates Steel Arkan pioneering efforts in this area. The EU imported 37.3 million tonnes of steel in 2023, and the impending CBAM is expected to significantly impact emissions-intensive imports from countries like China and India. Furthermore, Ma'aden, a key player in the region, has recently acquired a 21% stake in Aluminium Bahrain from Sabic, indicating potential consolidation that could reshape the aluminum industry landscape. [3151bab6]
The geopolitical tensions surrounding China's aluminum production, which is capped at 45 million tonnes, are also influencing global market dynamics. As GCC countries seek to capitalize on these tensions, they are positioning themselves as viable alternatives for low-carbon metal production. This strategic shift not only aims to meet the demands of the EU's carbon tariffs but also to enhance the region's competitiveness in the global metals market. [3151bab6]