The joint venture partners developing the $10.8bn aluminum complex being built at Ras al-Khair in Saudi Arabia expect the project to act as a major driver for Saudi Arabia’s downstream aluminum ambitions.
Speaking at the 2nd Saudi Downstream conference being held at Jubail in the Eastern Province, two senior officials from the local Saudi Arabian Mining Company (Maaden) and the US’ Alcoa clarified the benefits the complex will bring to the kingdom.
|Aluminium production costs|
“Our project offers huge potential in a number of areas and will create thousands of jobs, both working at the complex and in the major conversion industries that will cluster around the site,” said Khalid al-Luhaidan, director of planning, strategy and business development for Maaden. “The complex alone will provide 7,000 jobs in Ras al-Khair.”
The official said the aluminum complex is acting as the anchor for downstream development. Maaden will also give full technical assistance to any company seeking to establish operations at Ras al-Khair.
As evidence of the potential benefits the complex will bring, Al-Luhaidan gave examples setting out the potential for downstream aluminum investors. He quoted one study stating that in 2020, regional demand for aluminum foil will be 300,000 tonnes a year (t/y). Capital expenditure of $100m-$150m would enable a company to build a plant with a capacity of up to 50,000 t/y next to the Maaden/Alcoa site.
|Global aluminium demand|
|North & South America||17%|
A 380,000-t/y rolling mill is currently under construction and production is due to start in tandem with a 740,000-t/y aluminum smelter in 2013. The rolling mill is the largest to be built outside of China in the last 20 years and will provide aluminum sheet to food packaging manufacturers across the kingdom and the rest of the GCC.
“Companies across the region have been importing this sheet for the past 30 years,” said al-Luhaidan. “Soon they will be able to buy this product from a domestic manufacturer.”
The joint venture partners have also announced that the US’ Fluor has been awarded a contract that sources believe to be worth about $250m for the engineering, procurement and construction management (EPCM) of a 100,000-t/y automotive sheet plant at the complex.
The plant’s technology will be provided by Germany’s SMS Siemag and will be capable of producing sheets used by automotive industries to produce body panels for cars and commercial vehicles.
“The potential for using aluminium in automotive production is massive and growing every year” said Malcolm Murphy from the US’ Alcoa. “This means the Ras-al-Khair complex offers the perfect springboard for downstream industries.”
The smelter under construction will also provide slabs and billets that can be used for a multitude of automotive component providers, including manufacturers of engine blocks, wheels and forged products.
Other uses include related sectors, such as manufacturing trailers for commercial vehicles with lightweight aluminum, allowing for higher payloads.
“If the kingdom increases the number of original equipment manufacturers [OEM], then it will vastly increase the chances of automotive manufacturers setting up in the kingdom,” said Murphy.
Maaden and Alcoa expect the first metal from the aluminum smelter in December of this year with full production expected by the end of 2013.
In early March, the joint venture partners awarded South Korea’s Hyundai Engineering & Construction a $1.5bn engineering, procurement and construction (EPC) contract for a 1.8-million-t/y alumina refinery to be built at the Ras al-Khair complex.
The construction will take 29 months. On completion, the refinery will process 4 million t/y of bauxite transported by rail from Maaden’s mines at al-Baitha with the offtake feeding the adjacent smelter. Maaden officials stated that the smelter will source alumina from external suppliers until the refinery is operational.
The complex including the bauxite mine is the largest fully integrated complex ever constructed in one phase and will be the largest in the world when completed. Maaden holds a 74.9 per cent stake in the aluminium complex, while Alcoa owns the remaining 25.1 per cent.