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September 08, 2008


MMC and Binladin ink MoU with Chalco for an aluminum smelter

It is reported that MMC International Holdings Limited and Saudi Binladin Group have signed an agreement with Aluminum Corporation of China Limited to develop, own and operate an aluminum smelter at Jazan Economic City. The USD 3 billion smelter will have an annual production capacity of approximately 1 million tonne.

The plant will be developed by Sino Saudi Jazan Aluminum Limited, which will be jointly owned by Chalco with 40%, MMC with 20% and a Saudi consortium including SBG with 40%. This definitive agreement follows the signing of a preliminary MoU on October 4th 2007 to establish the smelter at JEC.

The smelter will be supplied with low cost electricity, which will slash the smelter's production costs and enable it to produce competitively priced aluminum. The plant's requirements for alumina will be supplied by Chalco, which will also guarantee the off take and distribution of the aluminum produced. A power plant with a generation capacity of 1,860 MW, which is estimated to cost USD 2 billion, will be required to satisfy the smelter's power needs.

Mr Amr Al Dabbagh general investment authority governor of Saudi Arabia said that “We are very pleased with the overall progress of JEC, which has commenced construction within one year of its launch. The latest addition of the second aluminum smelter and power plant with an investment close to USD 5 billion will bring the total capital invested in JEC to USD 20 billion. The original investment envisaged for JEC was USD 30 billion over a period of 25 years. We have achieved two thirds of this amount 1 year after the project's launch. This investment by Chalco in a smelter with an integrated power plant is the single largest investment by a Chinese company in Saudi Arabia.”

Mr Feizal CEO of MMC said that “For MMC, this is an attractive investment that meets our risk profile and investment returns. The alumina supply, technology support and product off take are guaranteed with the participation of Chalco. JEC's low power tariffs provide a competitive advantage for aluminum smelters that would otherwise be vulnerable to rising power costs elsewhere in the world.” He added that MMC intends to own at least 50% of this power plant, which will form part of a larger power plant complex that is planned to have an eventual generation capacity of approximately 5,000 MW.