Aluminum Bahrain (Alba): The Pot Line 5 Expansion Project Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Aluminum Bahrain (Alba): The Pot Line 5 Expansion Project Case Study Analysis

Comment on Historic Price Risk for Aluminum

The data for historic aluminum prices have been taken form the open source website, investing.com. In which, it has been shown that the aluminum prices on 13 October 2013 are 1,816.75 dollars while at 16 February 2020 are 1,720.75 dollars which shows the negative change in aluminum prices of almost 5.3 percent. Along with that, the highest prices of aluminum have been found in the year 2018 in which the prices have crossed its limit. The point in which the aluminum prices have gone at its peak at the date of 15 April 2018 of almost 2,485 dollars.

Country Analysis of Bahrain& Comparison of Bahrain with Countries in the Immediate Region

The economy of Bahrain is closely associated with the fluctuation in the global crude oil prices. However, the effect is narrower as compared to other gulf countries as the Bahrain economy is of diverse nature. As such, the economy of Bahrain grew in 2017 by 3.8 percent regardless of the sizeable oil industry contraction. The growth of the economy was subdued with the IMF bringing down the growth of GDP from 3.2 percent to 1.8 percent as of march 2019.

In contradiction to the positive aspects of the country, there is some risk thatis continuously emerging within a country such as; the increasing level of public debt, volatility in the level of reserves as well as increasing fiscal deficits. Numerous sovereign downgrades have brought Bahrain below the investment grade, hence the options of financing are comparatively expensive. In addition to this, the country has an undiversified and small economy that is highly vulnerable to the slight changes in the oil price and global demand conditions. Also, it has lower reserves for oil as compared to other Middle Easterncountries, which in turn makes it less resilient and in greater need of diversification in the economy(Country risk report, 2019). In 2016, the revenues generated from oil represented around 86 percent of the revenues of the Bahrain government, which is the second-highest figure in the Gulf CooperationCouncil (GCC) behind Kuwait. Furthermore, the dependency of Bahrain’s oil in the GDP and export domains is lower as compared in the neighboring nations, reflecting progress in economic diversification. Yet, the continued dependence of the budget on oil remainsa keychallenge for the government of Bahrain. Even though the dependence on export is low relative to the gulf countries, it remains at 69 percent which is considerably high and makes the ability of Bahrain to conduct its monetary policy sensitive to the revenues of oil & therefore prices of oil.

Dated back to 2001, the largest contributor to the economy of Bahrain was the energy industry, yet accounted for only 25 percent of the GDP of the country whereas the manufacturing particularly aluminum production and financial services accounted for 12 percent and 19 percent of the gross domestic product (GDP). Fueling the growth of the economy, the government aimed at making the country into the financial center for the Persian Gulf. Additionally, the government did not tax the corporate revenues which provide solid foundation to pursue the business operations in the country and generate higher revenues. The role of government in the economic growth of the country is inevitable as the government aimed to initiate the work training program in order to reduce the unemployment rate of the country as well as employ the maximum number of Bahrainis than foreigners (COUNTRY RISK OF BAHRAIN : ECONOMY, 2019). Additionally, the country has been enjoying the strong economic performance in recent years supported by the prudent macroeconomic policies by the government with structural reforms and by increasing the price of world oil. The government initiatives coupled with the largely aluminum production allows Alba to conduct the operations of the Plot Line 5 expansion project..................................

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