Tuesday, May 01, 2007 8:09:47 AM
Cheap energy the draw in $7-billion joint venture
Millie Munshi
Bloomberg News
Tuesday, May 01, 2007
Alcan Inc., the world's second-largest aluminum producer, plans to build a $7-billion "mine-to-
metal" project in Saudi Arabia with government-owned Ma'aden to take advantage of domestic raw materials and cheap energy.
Ma'aden is based in Riyadh, Saudi Arabia.
The venture will include a bauxite mine, alumina refinery, power plant and aluminum smelter, Montreal-based Alcan said Monday in a statement. It will have an initial annual capacity to produce 720,000 tonnes of aluminum. Mining company Ma'aden will have 51 per cent of the project and Alcan will hold the rest.
Alcan is spending on projects in the Middle East to increase aluminum output in countries that offer cheaper energy supplies. Electricity can account for about 30 per cent of the cost of production. The price of aluminum has doubled in the past four years. The Saudi smelter can be expanded to make as much as 2.1 million tonnes a year, Alcan said.
"This world-class project has an ideal combination of competitive energy resources, local bauxite, well-developed infrastructure and favourable
logistics," Alcan chief executive officer Richard Evans said in the statement. "This project has the potential to achieve one of the lowest operating costs in the industry."
Alcan shares have gained 16 per cent from a year ago. The company has a 20-per-cent interest in the Sohar smelter in Oman.
BAUXITE RESERVE
The project includes a 81-hectare, million-tonne bauxite reserve in Az Zabirah in northern Saudi Arabia, representing a potential 30 years of mining. It also has an alumina refinery with an annual capacity of 1.4 million tonnes and a 1,400 megawatt power plant.
The alumina plant, the power generator and the smelter will be in Ras Az Zawr on the east coast of Saudi Arabia. Metal production is scheduled to start in 2011, Alcan said.
The next steps for the project include completing the joint-venture agreement and pursuing financing for capital costs, Alcan said.
Alcoa Inc. is the world's biggest aluminum producer.
© The Edmonton Journal 2007
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