China's Chalco Invests in Saudi Smelter as Aluminum Set for Price Rise

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Researched by Industrial Info Resources (Sugar Land, Texas)--China is set to become a net importer of aluminum in 2008. Deutsche Bank reports that over the past six years, increasing Chinese production of aluminum and market oversupply has contained the price, but as authorities move to close inefficient smelters and to restrict the level of aluminum exports, imports will fill the gap. The bank will swing to aluminum and away from energy stocks as indicated by investment strategy programs. Since 2001, the metal's price has risen 95% - which is small when compared with the 650% rise in lead. Nickel, copper, tin and zinc have also appreciated by hundreds of percent in the same period, FinanceAsia reported.

The latest major aluminum smelter project to be announced is the project at Saudi Arabia's Jazan Economic City where MMC International Holdings (Kuala Lumpur, Malaysia) and Saudi Binladin Group (SBG) (Riyadh, Saudi Arabia) have signed an agreement with the Aluminum Corporation of China (Chalco) to build a 1 million-ton-per-annum (MTPA) smelter with an investment of $3 billion. Chalco, which has the monopoly of aluminum production in China and is the second largest producer of the smelter feed material globally, will hold 40% of Sino-Saudi Jazan Aluminum Limited, the project development company. MMC will hold 20%, and a Saudi consortium with SBG will hold 40%.Chalco's stake in the project will represent the largest single investment by a Chinese company in Saudi Arabia.

The smelter project will include a 1,860-megawatt (MW) integrated power plant with an estimated investment of $2 billion, bringing the total project investment to $5 billion. MMC is planning to hold a 50% stake in the power plant, which will be part of a larger power complex that will grow to 5,000 MW of generating capacity. Construction on the smelter and the power plant is scheduled to start in the second half of 2008 and be completed in 2012. For more information, see related May 2, 2007, article - Power Feed and Resources Attract Mega Aluminum Projects to Middle East.

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