Power Feed and Resources Attract Mega Aluminum Projects to Middle East

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Researched by Industrial Info Resources (Sugar Land, Texas). Power feeds and available natural resources continue to attract the world’s major aluminum producers to mega projects in the Middle East. Alcan (NYSE:AL) (Montreal, Canada) has just signed a $7 billion integrated mine-to-metal project with Saudi Arabia’s Ma’aden mining company, and Norsk Hydro (NYSE:NHY) (Oslo, Norway) is planning to invest $4.5 billion in a smelter in Qatar.

Alcan will have a 49% stake in the Saudi project at the new Minerals Industrial City at Ras Az Zawr on the east coast of the country. The initial phase of the project includes a 1,400 MW power plant and a mining operation at a 90 million ton bauxite reserve located in Az Zabirah in the north of the country which offers to supply 30 years of mining for the project. An alumina refinery with an annual capacity of 1.6 million tons will feed an aluminum smelter with an annual capacity of 720,000 tons per annum (tpa). The project will utilize Saudi Arabia’s port facilities and infrastructure.

Metal production is expected to begin in the first quarter of 2011 and the joint venture agreement and financing arrangements covering capital costs of the project are currently being processed.

Dick Evans, President and CEO of Alcan said, "This world class project has an ideal combination of competitive energy resources, local bauxite, well developed infrastructure and favorable logistics. Consistent with Alcan’s primary metal strategy, this project has the potential to achieve one of the lowest operating costs in the industry and become one of the world’s largest smelters."

The smelter will initially be based on two AP 36 potlines and will be designed to accommodate a potential expansion of four additional lines that could increase annual production to over two million tons. The project complements Alcan’s pipeline of projects in new regions for the company including those at Sohar, Oman and Coega in South Africa.

In Qatar, Norsk Hydro (NH) is investing in a 585,000 tpa smelter and hopes to expand capacity to 1.2 million tpa by 2012 depending on agreement with its 50/50 partner, Qatar Petroleum (QP), which will supply the project with natural gas with initial production starting in 2009/10.

With the energy feed making up 40% of aluminum’s production cost, cheap energy will determine future aluminum capacity over the next 20 to 30 years, said NH’S CEO Eivind Reiten. The company is looking at projects in Australia and Angola where a 600,000 ton hydro-powered smelter is being considered.

Reiten said that high energy costs increased the value of recycled metal with aluminum made from scrap using 95% less energy than metal produced from bauxite ore and he expected NH’s remelting capacity to grow.

NH’s products division growth is being driven by strong demand, particularly from Europe, for rolled and extruded aluminum with expected production in 2007 of 1 million and 600,000 tons respectively.

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