Saudi Arabian Mining Company (Maaden) is due to launch the financing for the second phase of its $10.8bn aluminium project in the first quarter of 2011, following the conclusion of funding for the first phase of the project in late 2010.

Sources in Saudi Arabia say the UK’s Standard Chartered and Riyad Bank, financial advisers on the project, have already started work on financing for phase two in preparation for approaching banks in February or March of 2011.

The second phase will include a bauxite mine and an alumina refinery and is expected to cost up to $4bn. Phase one included an aluminium smelter and a rolling mill. Financial close was reached on 30 November (MEED 30:11:10). The total amount raised for phase one was about $7bn. Most of the lending for the scheme came from Saudi banks.

A source close to the project says the exact breakdown of the financing for the scheme is still being worked on, but is expected to include a large portion of commercial loans from local banks lending in riyals.

“The Saudi banks are still very liquid and able to lend at much more competitive rates than international banks,” says one local banker.

The aluminium project is a joint venture of Maaden and the US’ Alcoa. Once completed, the project will include a 4 million tonne-a-year (t/y) bauxite mine, a 1.8 million t/y alumina refinery, a 740,000 t/y aluminium smelter and a 380,000 t/y rolling mill.