Alcoa (AAI) today announced it has formed a joint venture with Ma’aden, the Saudi Arabian Mining Company, to develop a fully integrated, world class aluminum industry in the Kingdom of Saudi Arabia. The joint venture will become the world’s preeminent and lowest cost supplier of primary aluminum, alumina and aluminum products, with access to the growing markets of the Middle East and beyond.
In its initial phases, the joint venture will develop a fully integrated industrial complex, including a bauxite mine with an initial capacity of 4,000,000 metric tons per year (mtpy); an alumina refinery with an initial capacity of 1,800,000 mtpy; an aluminum smelter with an initial capacity of ingot, slab and billet of 740,000 mtpy; and a rolling mill, with initial hot mill capacity of between 250,000 and 460,000 mtpy. The mill will focus initially on the production of sheet, end and tab stock for the manufacture of aluminum cans, and potentially other products to serve the construction industry. It will be one of the most technically advanced mills in the world. The complex will utilize critical infrastructure, including low cost and clean power generation, as well as port and rail facilities, developed by the Kingdom’s government. Bauxite feedstock for the planned alumina refinery will be transported by rail from the new mine at Al Ba’itha, near Quiba, in the north. The project will be developed and financed in two phases, with the rolling mill and smelter in the first phase. First production from the aluminum smelter and rolling mill is anticipated in 2013, and first production from the mine and refinery is expected in 2014.
Capital investment is expected to be approximately SAR 40.5 billion ($US 10.8 billion), subject to the completion of detailed feasibility studies and environmental impact assessments. Ma’aden will own 60 percent of the joint venture. Alcoa will control the remaining 40 percent of the joint venture through an investment partnership in which it will own 20 percent and its partners will participate through financing that represents the other 20 percent economic interest. Each of Alcoa and the partners will invest $900 million over a four‐year period and will be responsible for their pro rata share of the project financing, in addition to specific completion commitments. Alcoa will provide know how, management expertise and support during the design, construction and operation of the mine, refinery, smelter and rolling mill. Alcoa will also arrange the supply of alumina feedstock to the smelter from outside the Kingdom until the project refinery comes on stream. Alcoa and Ma’aden will work with leading international and local firms on the design and construction of the complex.
Alcoa President and CEO Klaus Kleinfeld said, “This joint venture is a once in a generation opportunity for Alcoa, for Ma’aden and for the Kingdom of Saudi Arabia. We are creating a fully integrated aluminum complex that will be the most technologically advanced and cost efficient in the world. By changing the operating dynamics and cost base within our industry, the complex will be a model for the growth of aluminum in competition with other metals and is designed with the potential for future expansion. The joint venture leverages the unique strengths of both Alcoa and Ma’aden to create substantial value for our investors, customers and partners.”
Tags: AAI, Alcoa, Aluminium, JV Agreement
