MMC International Holdings and Saudi Binladin Group (SBG) have signed an agreement with Aluminum Corporation of China Limited (Chalco) to develop, own and operate an aluminium smelter at Jizan Economic City (JEC).
The project will cost $3 billion and have an annual production capacity of one million tonnes. The plant will be developed by Sino-Saudi Jizan Aluminum Limited, which will be jointly owned by Chalco (40 per cent), MMC (20 per cent) and a Saudi consortium including SBG (40 per cent). This definitive agreement follows the signing of a preliminary MoU on October 4 to establish the smelter at JEC.
This agreement was among a series of six agreements and MoUs signed at JEC’s ground-breaking ceremony which witnessed the laying of the foundation stone of the project’s marketing complex, marking the beginning of construction work.
The ceremony was inaugurated by Prince Mohammad Bin Abdulaziz, Governor of Jizan, in the presence of Saudi Arabian General Investment Authority (Sagia) Governor Amr Al-Dabbagh and the Mayor of Jizan, Abdullah Mohammad Al-Qarni.
This major milestone comes within a year of JEC’s launch in November 2006 by the Custodian of the Two Holy Mosques, King Abdullah bin AbdulAziz Al Saud.
Al-Dabbagh said: “The latest addition of the second aluminium smelter and power plant with an investment close to $5 billion will bring the total capital invested in JEC to $20 billion. The original investment envisaged for JEC was $30 billion over a period of 25 years. We have achieved two-thirds of this amount one 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.”
Chalco is the sole producer of alumina in China, the second largest producer of alumina in the world, and among the top five largest producers of aluminium in the world. The plant’s requirements for alumina will be supplied by Chalco, which will also guarantee the offtake and distribution of the aluminium produced. Explaining the rationale for MMC’s investment in the smelter, MMC Group chief executive Feizal Ali said the alumina supply, technology support and product offtake were guaranteed with the participation of Chalco. He added that JEC’s low power tariffs provided a competitive advantage for aluminium smelters that would otherwise be vulnerable to rising power costs elsewhere in the world.”
Ali also said MMC intends to take a share of at least 50 per cent in a power plant of capacity 1,860 MW that would be set up for the smelter. The capacity could go up to 5,000 MW
The construction of the aluminium smelter and power plant is scheduled to begin during the second half of 2008 and be completed in 2012.
