The UAE-based Emirates Aluminium’s (Emal) plans to build two world scale smelters worth a combined $10bn in Algeria and Saudi Arabia are now on hold due to external pressures in both countries.

The Beni Saf Aluminium Smelter project in Algeria has been delayed following the corruption scandal that engulfed Emal’s joint venture partner, the state-owned energy company Sonatrach (MEED 5:3:10).

“The problem with any smelter project is that it is extremely difficult to get off the ground to begin with,” says a source close to the project. “Since the corruption allegations stalled the project [in January], there has been no movement at all and there is no immediate plan to get it moving.”

The source also adds Algeria’s foreign investment rules, which mean any investment must be at least 51 per cent owned by an Algerian company has not helped. “The legislation on foreign investment is tough on companies like Emal,” the source says. “With a smelter project you have a lot of conflicting forces that need to be lined up such as finance, feedstock, power supply and governmental approval. This is difficult to achieve in Algeria at the moment.

“However, despite all of this I am confident that a smelter will be built in Algeria eventually,” he added. “Emal will just have to be patient.”

Emal planned to build the Beni Saf smelter in three phases with its final capacity hitting 1.5 million tonne-a-year (t/y). Emal owns 49 per cent of the project, with Sonatrach owning the remaining 51 per cent.

Emal’s aluminium smelter at King Abdullah Economic City (KAEC) in Saudi Arabia is now also on hold. A source tells MEED the Ras al-Zour smelter being constructed by the Saudi Arabian Mining Company (Maaden) and the US’ Alcoa, has pushed other smelter projects onto the backburner.

“[Emal’s] Saudi Arabian smelter is stuck because of the Maaden project,” the source says. “Emal can do nothing until the KAEC, Saudi Aramco and the Ministry of Petroleum give it permission to proceed.  

“Once Maaden is up and running then I think that the kingdom is going to look at other smelter projects,” he adds.

Like Beni Saf, the scheme plans to have a capacity of 1.5 million-t/y that will be built in three phases.

Another source says that Emal are currently concentrating on its domestic operations and are conducting feasibility studies for the phase II expansion at its smelter at Taweelah in Abu Dhabi.

“Emal has no control over Algeria and Saudi Arabia,” the source says. “If it builds its phase II at Taweelah, then that will push production up to 1.5 million-t/y, which is still impressive considering the short time it has been established. The feasibility studies are looking good.”

Emal was not available for comment when contacted by MEED. The company is a joint venture between Abu Dhabi government-controlled Mubadala Development Company and Dubai Aluminium Company (Dubal).