Alcoa-Maaden aluminum complex started in Saudi

By Steve James

NEW YORK (BestGrowthStock) – Alcoa Inc (AA.N: ), the largest U.S. aluminum producer, planted its footprint in the Middle East on Sunday, starting the construction of a $10.8 billion integrated smelter and rolling mill complex in Saudi Arabia.

“We are developing something out of the sand,” Ken Wisnoski, Alcoa’s president of Global Primary Products Growth, told Reuters in an interview.

“This project, and future expansion, will be the region’s first, and the world’s lowest cost, fully integrated aluminum complex. It is poised to fulfill a significant share of the growth in global aluminum demand in years to come.”

Wisnoski likened the project — a joint venture with Saudi Arabian miner Maaden (1211.SE: ) on the Persian Gulf at Raz Az Zawr — to the Saudi city of Jubail, the largest industrial complex of its kind in the world, with petrochemical and fertilizer plants, steel works, an industrial port and a number of support industries.

“The Saudis have done it before and it was very successful,” said Wisnoski.

In addition to a smelter and a rolling mill to produce food-grade cans, the second phase of the joint venture will include a bauxite mine with an initial capacity of 4 million metric tons per year and an alumina refinery with an initial capacity of 1.8 million metric tons per year.

First production for the smelter and mill is set for early 2013, with the mine and refinery scheduled for 2014. Alcoa will provide alumina feedstock for the smelter in the interim.

“I’m quite relieved, we’re on schedule, slightly ahead in fact,” Wisnoski said of the start of building. “We will be employing 25,000 plus people on the construction.

He said Bechtel, the largest U.S. engineering company, is building the smelter, which initially will produce 740,000 metric tons of primary metal.

Fluor Corp (FLR.N: ), the largest publicly-traded U.S. engineer, will construct the rolling mill, which will initially produce 380,000 metric tons of food-grade can sheet. Both are designed for significant expansion.

Fluor and Australia’s WorleyParsons Ltd (WOR.AX: ) are building the bauxite mine and the refinery, where bauxite is refined into alumina to feed the smelter. Fluor is the overall project manager, Wisnoski said.

“This is the first complex of its type in the Middle East, combining a rolling mill with mine, refinery and smelter.”

He said Saudi Arabia, which mines phosphate nearby, has bauxite deposits and will build the infrastructure, including a railroad, to connect the mines with the complex and port.

The Saudis will also supply the natural gas for a 2400 megawatt power plant to generate electricity for the smelter and the community that will grow around it, he said. The complex will employ about 4,000, in addition to contractors.

The start of construction comes just ten months after the companies signed agreements to establish the low-cost project. Maaden holds 74.9 percent of the joint venture and Alcoa has 25.1 percent with provisions to increase that to 40 percent.

(Reporting by Steve James; Editing by Bernard Orr)

Alcoa-Maaden aluminum complex started in Saudi