Aluminum Corporation of China Ltd (Chalco), the country's top aluminum producer, will team up with Malaysia's MMC and Saudi Arabia's Saudi Binladin Group for a joint aluminum project in the Kingdom The project, to cost $4.5 billion, includes an aluminum smelter plant and an equipped power plant in Jizan Economic City, under an agreement the three sides signed here on Friday. The smelter will have an annual production capacity of 1 million tons. Chalco would take a 40 percent stake in the plant as the largest shareholder and control 20 percent of the power plant shares. It would also provide technology and alumina for the project. According to earlier reports, Chalco was to take a 40 percent stake in the project, while MMC and Binladin would each take 20 percent stakes. Other Saudi investors would share the remaining 20 percent stake. The three sides also signed a memorandum of understanding on supporting issues with the Saudi Arabia General Investment Authority, which promised to offer necessary support to the joint-venture project. Chalco's commitment in the joint venture ranks as China's largest investment in Saudi Arabia so far. The aluminum producer, whose shares are traded both in Shanghai and Hong Kong, will own a 40 percent stake in the joint venture to become its largest single shareholder. Syed Mokhtar Al-Bukhary-backed MMC will hold a 20 percent share, while a consortium of local investors led by the Saudi Binladin Group will hold the remaining stake. The proposed aluminum smelter plant will have an annual production capacity of one million tons of aluminum, Chalco president Luo Jianchuan said. “The low electricity cost within the JEC will lower our production costs and enable us to offer competitively priced aluminum to meet the world's growing demand,” Luo said. Electricity costs an average of $20 per megawatt-hour in the Middle East, compared with $28 in the United States and $40 in China for the same measure, according to Fitch, an international rating agency. An associated 1,860MW power plant will also be built, costing an estimated $2 billion. Chalco will take a 20 percent stake in the facility to become its third largest shareholder. - Agencies They signed the deal in Beijing yesterday with the Saudi Arabian General Investment Authority. It would enable the power plant to supply low-cost electricity to industries within Jazan, including the aluminium smelter to be jointly owned by MMC International, Chalco and a Saudi consortium, MMC Corp Bhd said in a statement. “The competitive tariff at Jazan will drastically reduce the smelter's production costs and give it an advantage to serve the growing world market for aluminium in a period of rising energy costs,” said MMC International chief executive officer Feizal Ali. The smelter will have an annual production capacity of about one million tonnes and estimated to cost $3 billion. It was scheduled to begin construction at the same time with the power plant in the last quarter of 2008, the company said. “This plant will initially generate 2,460MW, which will eventually increase substantially to cope with Jazan's anticipated massive growth,” Feizal said. MMC International would also have a 50 percent stake in the power plant that would supply electricity to the smelter, he said. “MMC also intends to own a 50 percent stake in the port which will be built to serve Jazan,” he added.
