Saudi Arabian Mining Company (Maaden) has received bank commitments well in excess of the $1bn it was trying to raise for the $3.6bn phase two of its aluminium complex.

According to a source close to the project, the deal is “massively oversubscribed” after banks submitted loan proposals to the company in early June (MEED 30:05:11).

The majority of the funding is understood to be from local banks lending in Saudi Riyals, although there has been a small number of dollar commitments from Saudi lenders as well. The response from international banks has not been as strong.

Sources in Riyadh say the deal is expected to price slightly lower than the 165 basis points above the Saudi interbank offered rate (Sibor) that Maaden agreed on bank loans for the aluminium smelter and rolling mill in 2010 (MEED 30:11:10).

“There is so much liquidity in the Saudi banks at the moment that people are offering commitments of $200m or more, in the expectation that the deal will be so oversubscribed they will be scaled back to maybe even half that figure,” says one banker in Riyadh.

By the end of June, the UK’s Standard Chartered and the local Riyad Bank are expected to have informed banks about the margin on the deal and other terms. Financial close is planned for late summer.

The funds raised this year will be used by Maaden and the US’ Alcoa to develop a bauxite mine and alumina refinery.