Emal signs 30-year gas deal with Adnoc

09 May 2008
Contract will provide feedstock for the $5.6bn aluminium smelter at Khalifa Port & Industrial Zone.

Emirates Aluminium (Emal) has signed a 30-year gas supply deal with Abu Dhabi National Oil Company (Adnoc) for its $5.6bn aluminium smelter at Khalifa Port & Industrial Zone at Taweelah.

It was widely assumed that the smelter would receive gas from the Dolphin feedstock pipeline, which will bring gas into Taweelah from Ras Laffan in Qatar, but a source close to the project tells MEED the deal has now been signed with Adnoc.

Emal would not confirm the deal with Adnoc, but says it has secured long-term gas supplies for the project. "We have secured energy for both phases of the project for 30 years from commencement of operations," says Duncan Hedditch, chief executive officer of Emal.

Feedstock is a growing concern for industrial projects in Abu Dhabi and the rest of the Gulf. It is understood that the aluminium smelter planned for Ruwais by Abu Dhabi Basic Industries Corporation (Adbic) was put on hold earlier this year because the government had not made gas available for the project (MEED 18:4:08).

Unlike the Emal plant, which will have its own 2,000MW power plant, the Adbic smelter was to rely on Abu Dhabi Water & Electricity Authority (Adwea) to supply electricity from the grid.

With gas supplies and financing secured through a syndicated loan in December 2008, the Emal project is now entering the first year of construction.

A joint venture of Canada's SNC Lavalin and Australia's Worley Parsons was awarded the engineering, procurement and construction management contract for the plant in May 2007. On 7 May this year, $2.5bn worth of contracts were signed on the project, including a $500m contract with the US' GE, a $136m deal with Japan's Fuji Electric and a $200m contract with France's Alstom for the facility's gas treatment centres.

Piling and foundation works have begun on several buildings including the power plant, and long-lead items have been delivered onsite to avoid unexpected cost increases and delays.

"We went out early for long-lead items and we bought it," says Hedditch. "We committed $1.1bn early on to secure the schedule."

Phase one of the smelter, which will have a capacity of 700,000 tonnes a year (t/y) of aluminium, will be completed in the second quarter of 2010. It is expected to generate revenues of about $2bn a year - subject to commodity prices at the time.

A second phase, which will increase capacity by 700,000 t/y, taking total capacity to 1.4 million t/y, will make it the largest single-site smelter in the world.

Emal was established in February 2007 through a 50:50 joint venture of Dubai Aluminium Company (Dubal) and Mubadala Development Company.

Emal is also exploring oppor-tunities in Saudi Arabia and Algeria. In Saudi Arabia, it has signed a memorandum of understanding to develop a smelter at King Abdullah Economic City, which is being developed by Dubai-based Emaar, The Economic City.

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