Saudi Aluminum Smelter Designed for Expansion -Ma'aden

BAHRAIN, Sep 21, 2010 (Dow Jones Commodities News via Comtex) --The planned new aluminum smelter in Saudi Arabia was designed for "significant expansion," a senior executive at one of its joint venture partners, Saudi Arabian Mining Company, or Ma'aden, said Tuesday.

Abdullah Busfar, vice president of aluminum and project development, said the plant is part of the country's diversification into other industries to reduce its reliance on oil.

Ma'aden is involved in a joint venture with U.S. producer Alcoa Inc (AA) to build a huge aluminum complex in Saudi Arabia. The project, in the new industrial zone of Raz Az Zawr on Saudi Arabia's east coast, will create the largest integrated aluminum project that has ever been built.

Initial capacities will be a bauxite mine of 4 million metric tons, an alumina refinery of 1.8 million tons, an aluminum smelter of 740,000 tons and a rolling mill of between 250,000 tons and 460,000 tons.

Busfar didn't specify how large an expansion might be.

In the period between the smelter starting and the refinery coming online, the shortfall in alumina will be supplied by Alcoa, Busfar said.

Four tons of bauxite makes two tons of alumina, which in turn makes around a ton of metal. Aluminum is a key material used in industries like construction and automotives.

The integrated project is at the lower end of the cost curve, Busfar said, and will be the first rolling mill in the region supplying food-grade cansheet, such as water bottles.

"The plant is the foundation for Saudi Arabia's downstream industry development," Busfar said. "It'll be a major catalyst for new business and employment opportunities," he added.

Ma'aden has a 74.9% stake in the joint venture. Alcoa has started out with the remaining a 25.1% stake and has an option to bring it up to 40%. First production from the smelter and rolling mill is due in 2013 and first output from the mine and refinery is expected in 2014.

A few weeks ago a contract was awarded to a group including Siemens AG (SI), Al-Arrab Contracting Co and Shanndong Electric Power Construction Co to build a power plant at the complex site, Busfar said.

He was speaking at the Metal Bulletin aluminum conference in Bahrain.