Aluminium production in the Middle East is expected to exceed 3 million tonnes per year (tpy) by the end of 2010, the chairman of the newly formed Gulf Aluminium Council (GAC) Abdulla Kalban said on Tuesday.

Current production in the region was pegged at about 2 million tpy which made up about 5-6 percent of the global production capacity, he said.

New capacity which was expected to come online this year included the UAE's Emirate's Aluminium which is expected to hit its production target of 700,000 tpy for phase one by December and Qatar's 585,000 tpy smelter which will hit its target by the end of the third-quarter or early in the fourth-quarter.

Kalban said global aluminium demand, which is expected to grow by 12 per cent this year, was being driven by construction, transportation and packaging sectors.

Global demand was expected to remain relatively robust despite moves by China to tighten bank lending and raise capital requirements for domestic banks, said Kalban, who is also the president and chief executive of Dubai Aluminium (Dubal).

China has been a principal driver of the global economic recovery, having spent heavily on stiumulus packages last year as the mature economies of the United States and Europe grappled with the worst financial crisis since the Great Depression.

'We are bullish about the market for 2010, 2011, the signs are encouraging,' Kalban told a press conference.

Demand in the region is expected to be fuelled by the construction sectors in the UAE, Saudi Arabia and Qatar, he said.

The United Arab Emirates has invested around $20-$22 billion in developing new smelter capacity, Kalban said, which was more than half of the total investments in the region which included plants in Bahrain, Oman, Saudi Arabia and Qatar. - Reuters