Saudi aluminium industry takes off

The region now accounts for some 8 per cent of world aluminium production and with new smelters and expansions to existing facilities coming on stream this is likely to rise substantially.

With the price of aluminium in a range well over $2,000 a tonne and demand for the metal rising 5 per cent a year fuelled by the Middle East's construction boom, and industrial expansion in China and Asia, prospects for low-cost aluminium producers have seldom looked so good.

This confidence is shown by the $7 billion agreement to exploit the Kingdom's northern bauxite deposits and also construct and operate an aluminium smelter on the east coast of Saudi Arabia reached by Saudi Arabian Mining Company (Maaden) and Alcan.

The deal involves building a 1,400 mw power plant and alumina refinery with a capacity of 1.6 million tonnes-a-year as well as a smelter able to produce an initial 720,000 t/y of aluminium.

The fully integrated mine to metal project has resources and competitive sources of energy unrivalled in the rest of the Gulf. A new 1,400 kilometres north-south railway will bring bauxite from mines in the northern Azzabira area to be refined into alumina at a new industrial site and port being developed at Ras Az Zawr on the Gulf coast.

The site's smelter is expected to be on stream by 2011 and it is expected that a range of downstream industries will then develop.

According to Dick Evans, president and CEO of the Montreal-based Canadian company, the project has the potential to achieve one of the lowest operating costs in the industry and become one of the world's largest smelters.

This is a vital economic consideration since energy typically accounts for up to 40 per cent of the cost of producing aluminium.

Maaden's announcement follows closely on agreements signed by Saudi and Chinese companies to build an aluminium smelter on the Red Sea coast in Jizan's new economic city in a $5 billion investment including a power station and other infrastructure.

The Saudi company Western Way for Industrial Development (WWIDC) is leading a consortium including China Nonferrous Metal Industry's Foreign Engineering and Construction Company (NFC) and China National Machinery Industry Corporation (Sinomach) to build the planned aluminium complex in Jizan.

Other investors include the US Connecticut-based trading company Gerald Metals, Malaysia's power and engineering company MMC Berhad and the Saudi Binladen group both of which are lead developers of Jizan's new economic city development.

According to Western Way's chairman Abdullah Basodan the complex will produce an initial 700,000 t/y of aluminium and rank as one of the world's most cost-effective aluminium production ventures.

Amr Al-Dabbagh, governor of Saudi Arabian General Investment Authority, the Kingdom's principal foreign inward investment promoter, says the Jizan smelter represents China's largest ever project in the Middle East which is expected to create up to 12,000 job opportunities.