Sep 24,(Bloomberg)--Saudi Arabian Mining Co., the state-controlled metals producer known as Ma'aden, is targeting a 22 percent jump in the price of aluminum as demand recovers.
An "excellent"price would be $2,800 a metric ton, as seen before the economic crisis, Executive Director for Project Management and Engineering Abdullah Abdulgader said in an interview in London. While such an increase "will take time,"Ma'aden is seeing "very positive indications,"he said.
Aluminum slumped 11 percent in the first half on concern supply would outpace demand. The metal, used in transport, packaging and construction, has since rallied on speculation that unprofitable smelters will shut and carmakers predicted record production this year. Aluminum for three months ahead closed at $2,292 on the London Metal Exchange yesterday.
Ma'aden, which operates in the gold, phosphate and other mining industries, is concentrating on its aluminum business, Abdulgader said yesterday. The Riyadh-based company is building an aluminum smelter with Alcoa Inc. as part of a 40.5 billion- riyal ($10.8 billion) industrial complex in Saudi Arabia.
Ma'aden's board in June approved $4.5 billion in financing for the first phase of the smelter project, scheduled to start output in early 2013. The company will borrow from local and foreign banks and government funds, it said.
Ma'aden plans to be the lowest-cost producer of the metal, which will "give us an edge to have a good place in the market,"Abdulgader said.
The company reported a second-quarter profit of 31.2 million riyals in July, after posting a loss of 6.56 million riyals a year earlier. Ma'aden sold 50 percent of its shares in an initial public offering in 2008.
United Co. Rusal, the world's biggest aluminum producer, said Sept. 21 it expects prices for the metal to reach $2,400 to $2,500 a ton next year.