CITIC's contract will come into effect one month after signing. Salco officials say the contract will have a duration of 41 months and is worth $935 million. The smelter will have capacity of 275,000 tonnes a year (t/y) of aluminium, with two further phases of up to 315,000 t/y each under planning.

The complex will also include a harbour and port facilities and is to be situated in the Mines & Minerals Special Economic Zone at Bandar Abbas in Hormozgan province. Salco has an agreement to use electricity at $2 a kWh from the proposed private power plant under construction at the Almahdi smelter on an adjacent site. However, if the project does not move forward quickly enough, Salco could tender its own power project. It will need 580 MW for phase 1. The Netherlands' Tebodincarried out the feasibility study.

CITIC is to bring 100 per cent finance to the deal, mainly based on a Chinese government export credit guarantee. It is understood that it was partly this offer, combined with the large difference in price between CITIC and the other bidders, that led it to win the contract. Originally, Salco had requested bidders to bring only European technology to the project.

The nearby alumina project will be based on the development of Iranian government bauxite mines in Guinea. This project will have capacity of 1.5 million t/y and is being examined by the Salco shareholders. The feasibility study will be completed this year and includes means of transporting the bauxite from the mine to the Guinean coast - some 400 kilometres away.

Salco was formed in 2003 to use cheap and plentiful natural gas to develop Iran's aluminium industry. Ghadir Investment Company, an affiliate of the local Bank Saderat, is a 51 per cent shareholder in Salco, with Iranian Mines & Mineral Industries Development & Renovation Organisation (IMIDRO)and the Oil Ministry holding the remaining shares.

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