The contract is valued at about $200 million and calls for the construction of a 110,000-tonne-a-year (t/y) smelter. Originally, the plant was to be located near Iralco's existing 120,000-t/y smelter in Arak. However, Iralco says that the new smelter will be moved to a site further away from residential areas.

Iralco and NFC are renegotiating the terms of the contract to take into account the new location, which is expected to increase the value of the contract by up to 30 per cent due to the need to build additional facilities.

NFC will provide its own technology for the smelter, with key equipment, including transformers and compressors, set to come from European companies, according to Iralco requirements. Construction will take three years.

Once operations commence at the new smelter, Iralco's existing plant in Arak will be decommissioned and replaced with a new facility, equipped with modern technology. The Arak smelter operates with 30-year-old technology from the US' Reynolds Metals Company.

The NFC contract is the second major contract award by Iralco in recent months. Italy's Fata Grouphas started work on a contract to expand Iralco's Al-Mahdi aluminium smelter, located in Bandar Abbas, to 110,000 t/y. Iralco plans to further expand the Al-Mahdi smelter to 330,000 t/y at a later stage (MEED 27:7:01).

Additional aluminium capacity is planned and new tenders for aluminium smelters throughout the republic are expected next year. The expansion drive is part of a larger programme at the Industries & Mines Ministry to raise production to 1 million t/y by 2009 from the current level of 138,000 t/y.

NFC has worked on several projects in Iran and has the $60 million engineering contract for the Khatoon Abad copper smelter in Sirjan. The client is the National Iranian Copper Industries Company.