UAE Company Signs Power and Smelter Deals in Algeria

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Researched by Industrial Info Resources (Sugar Land, Texas). Mubudala Development Company (MDC), an investment and development vehicle, struck two major deals in Algeria in the first days of February 2007. The announcement of a $900 million project to construct a 1.227-megawatt (MW) gas-fired thermal power station in Tipaza province was closely followed by the announcement of an agreement with Algeria’s state oil and gas company, Sonatrach, to construct Algeria’s first aluminum smelter with Dubal at Beni Saf on the western coastline of the country. MDC is wholly owned by the government of Abu Dhabi. Dubai Aluminum Company (Dubal) is wholly owned by the government of Dubai.

The Tipaza project covers the development, construction and operation of the power plant and will be executed through Shariket Kahraba Hadjret En Nouss (SKH SpA), a newly established company owned 51% by Algerian Utilities International, Limited (AUI) and 49% by the three state-owned Algerian companies, Sonatrach, Sonelgaz and Algerian Energy Company. The corporate web of interconnections thickens with AUI being owned by MDC and SNC-Lavalin International (OTC:SNC) (Montreal, Canada).

At the site to the west of the capital Algiers, design work and construction activities have started, and when the E+P+C (engineering, construction and procurement) contract is complete in 2008, the power generated will be sold to Sonelgaz under a 20 year contract.

The CEO of MDC, Waleed Al Mokarrab Al Muhairi, said the financial close on the contract was another step in MDC’s strategic plans in the power sector as well as in Algeria where the company was developing large-scale projects in other industries. He said that the new power plant would add almost 20% to Algeria’s current energy supply and was a decisive step for future social and industrial developments in Algeria, adding that MDC wanted to be associated with the country’s promising growth.

The new $5 billion smelter project will include a 2,000 MW dedicated power unit with a specially constructed wharf to handle the import of raw materials and export of aluminum. The smelter will feature two potlines, using the modern and energy efficient DX technology from Dubal. The smelter will be located on a 400-hectare site on the western coastline of Algeria and is designed to produce 700,000 tons of high-grade primary aluminum per annum.

Khaldoon Khalifa Al Mubarak, Managing Director of MDC, said that the investment in the project was necessary to provide for an increase of global demand for aluminum. He said that the rising cost of energy in some regions continued to make older smelters uneconomic, whereas Algeria’s abundant supply of energy and its regional position made for an exciting opportunity.

Pre-feasibility has been completed and a detailed feasibility study will commence immediately which includes an environmental and societal impact assessment study to ensure industry best practices during the design, build and operation of the project. Dubal will provide essential technical support and resources throughout the life of the project.

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