Ma'aden and Alcoa to Construct Aluminum Complex by 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Saudi Arabian Mining Company (SAU:1211) (Ma'aden) (Riyadh, Saudi Arabia) and Alcoa Incorporated (NYSE:AA) (Pittsburgh, Pennsylvania) have joined for an upcoming project to manufacture bauxite, aluminum, alumina and aluminum products in Saudi Arabia. Both companies are investing $10.8 million in the project.

When completed, the facility will have an annual production capacity of 4 million metric tons of bauxite; 1.8 metric tons of alumina; 740,000 metric tons per year of aluminum; and 460,000 metric tons per year aluminum products. Bechtel Group (San Francisco, California) is the consultant for the feasibility study of the project. In May 2010, a $74 million contract was officially signed with Fluor Arabia for management services, engineering works and supervision of infrastructure construction at the site.

Initially, Rio Tinto Alcan was supposed to provide various types of support. In December 2008, Rio Tinto Alcan decided to withdraw from the shareholder agreement because of the global financial crisis.

In January 2009, Ma'aden decided to delay the start of production at the complex by two to three years because of the financial slowdown and the withdrawal of Rio Tinto from the projects.

Financing for the project is divided between $5 billion for the aluminum smelter and $2.5 billion for the rolling mill. Local and international banks will contribute $1.7 billion, and a $1.3 billion loan will be obtained from the Public Investment Fund. About $320 million will be obtained from the Saudi Industrial Develpement Fund. In January 2010, the local Public Investment Fund and the Saudi Industrial Development Fund were expected to contribute the majority of the funding. The tenure of the debt will be more than 15 years.

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