Saudi Arabian Mining Co (Maaden), which plans to sell shares to the public this year, has said it expects to sign a deal with Rio Tinto by August for a $7.5-billion aluminium complex.

Maaden and Rio Tinto unit Alcan agreed last year to develop one of the world’s largest aluminium-making projects, including a smelter, an alumina refinery and a power station, in Saudi Arabia, the world’s biggest oil exporter.
“We are hoping to finalise the aluminium joint venture with Rio Tinto by August,” Maaden chief executive officer Abdullah Dabbagh told reporters on the sidelines of a conference in Dubai.
The 670,000-tonne-per-year smelter should cost about $7.5 billion, Dabbagh said. Earlier, the project cost was quoted as $7 billion. To help finance expansion, state-owned Maaden plans to raise 9.25 billion riyals ($2.47 billion), plus a premium, in an initial public offering (IPO) this year in Saudi Arabia, Dabbagh said.
The sale of a 40 per cent stake in an IPO was awaiting approval of Saudi Arabia’s Capital Markets Authority, he said. Maaden will also sell a 10 per cent stake to two state funds.
“I’m hoping it will happen this year. If not, it will be a problem for us,” Dabbagh said.
The share sale, on which JPMorgan Chase & Co is advising, was initially planned for last year.
Maaden, which generates most of its revenue from gold production, is developing projects, including phosphate mining, worth about 44 billion riyals as the kingdom seeks to diversify its economy away from energy.
The phosphate venture with state-controlled Saudi Basic Industries Corp (Sabic) will cost about 17 billion riyals, and Maaden should soon finalise a loan to help fund it, Dabbagh said, without specifying the size of the loan.
Maaden had appointed banks to arrange a $2.3 billion syndicated loan for the venture, a banking source said in February.
“At the moment, we are hoping to close a loan, which includes an Islamic tranche, for a phosphate project,” Dabbagh said.
Saudi Arabia has been making efforts to attract investment from big aluminium makers, relying largely on gas-fired electric power.
Alcan said last year it would own 49 per cent of the aluminium project, which would draw on a 90-million-tonne bauxite reserve in Az Zabirah in northern Saudi Arabia, representing 30 years of mining in terms of proven reserves.
Maaden expects the project’s first metal to be poured by 2012, Dabbagh said.
Saudi Arabia’s mineral reserves of gold, silver, copper, lead, zinc, tantalum, among others, were “almost the size of the Canadian shield”, Dabbagh said, referring to the vast layer of solid bedrock that covers much of northern Canada.
“The problem is that it is not being explored,” he said, adding the government had passed a new mining law to allow foreign companies to ramp up exploration and production of minerals.