South Korea’s Hanwha Engineering & Construction has emerged as the frontrunner for the engineering, procurement and construction (EPC) contract on the aluminium rolling mill project at Ras al-Zour in Saudi Arabia.

“Hanwha has bid around $650m for the rolling mill,” says a source. “In today’s market this is as competitive as it gets.”

The prospect of a formal contract award could be damaged by media reports from South Korea that say Hanwha Group chairman Kim Seung-yeon has been indicted on embezzlement charges.

Seung-yeon was indicted by South Korean prosecutors along with 10 other group executives on charges related to the embezzlement of hundreds of millions of dollars from the company.

Maaden projects
Project Capacity (t/y) Budget
Smelter 740,000 $7bn
Alumina refinery 1.8 million $2bn
Rolling mill 380,000 $2.5bn
Bauxite mine 4 million $200m
Source: LME

“While this shouldn’t affect the day-to-day running [of Hanwha Engineering & Construction], it might still affect the outcome of this particular project,” a South Korean contracting source says.

The joint venture partners behind the scheme, the Saudi Arabian Mining Company (Maaden) and the US’ Alcoa, have also shortlisted South Korea’s Samsung Engineering and Daelim, but Hanwa is believed to be the lowest bidder (MEED 25:1:11) .

Maaden president, Abdullah Dabbagh, refuses to be drawn on who the successful bidder is for the EPC contract.

“The decision is close, but we need to inform the necessary stakeholders before we can inform the media,” he says. “There should be an announcement very shortly.”

Dabbagh also reveals that the rolling mill will have a capacity of 380,000 tonnes a year (t/y) when completed, which will make it the largest mill constructed outside of China in the past 20 years. The plant will produce can stock that will be sold within Saudi Arabia and the rest of the GCC.

“There is no facility like this in the whole of the Mena region,” Dabbagh says. “When it is completed, the offtake will supply the Saudi Arabian market and any surplus will be sold to the rest of the region.” 

Maaden is also currently looking for a financial adviser for present and future projects. Dabbagh says the firm is in discussions with several banks.

“Due to the amount of project work we have going on at the moment we have obviously been working with the banks for some time,” he says. “We plan to raise some money this year and we have a number of options available.”

“Because of this we would like a financial adviser on board to help us make the right decision. Raising finance [at Maaden] is not a serious problem, but we still want to make the right choice,” he adds.

Maaden and Alcoa have also recently released the tender for a $200m tank farm for the site at Ras al-Zour.

A total of 10 companies have been prequalified to bid for the project, which is being managed by the US’ Fluor and Australia’s WorleyParsons from a joint venture office in Brisbane Australia.

“The tenders have been released and the bidding is under way,” says a source in Saudi Arabia. “It is not an open bid, companies have had to prequalify.”

“Meetings have been held in Brisbane, but there has been some delays due to the flooding that has taken place. Because of this, it is likely the bid deadline could be extended,” the source adds.

The bid deadline is currently scheduled for the end of February, but it is now possible that this may be extended to mid-March.

“Maaden and Alcoa are fast-tracking the whole project, so they will only take a month to make a decision,” the source says.

The contract is for about 18 months, with completion due for mid-2012. The scope of works includes both shop and on-site fabrication of tanks.

The Ras al-Zour complex will also include a 1.8 million-t/y alumina refinery and a 740,000-t/y aluminium smelter, with a 4 million-t/y bauxite mine being built at Al-Baitha.

Maaden holds a 74.9 per cent stake in the aluminium complex, while Alcoa owns the remaining 25.1 per cent.