Bahrain cuts budget for aluminium smelter expansion

30 May 2016

Budget slashed by $500m

Aluminium Bahrain (Alba) has reduced the budget of its expansion project to $3bn from $3.5bn, after a review in response to lower oil prices, the state-owned company has said.

The project to build a sixth smelter potline will boost Alba’s production capacity by 540,000 tonnes a year (t/y) to 1.5 million t/y, and will make the plant the world’s largest single-site aluminium smelter.

“Following our ongoing review in response to the lower oil prices and the commodity market’s soft conditions, capital expenditure (capex) has significantly shrunk to about $3bn,” the company said in a statement.

The initial bankable feasibility study of the sixth potline and Power Station 5 estimated the value of the scheme at $3.5bn.

“Alba is now looking at different scenarios in the structuring and financing for the project,” the firm said.

In April, US-based Bechtel was awarded the engineering, procurement and construction management (EPCM) deal for the scheme. Bechtel had won the EPCM contract on the previous fourth and fifth potline expansions.

It is unclear whether the budget reduction was negotiated before Bechtel was awarded the deal.

The sixth potline will have 424 pots that will use the proprietary EGA DX+ Ultra technology.

Alba was granted government approval for the project in the second quarter of 2015. The expansion is expected to be completed in January 2019.

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