The Ras al-Zour aluminium smelting complex planned by Saudi Arabian Mining Company (Maaden) is set to go ahead despite costs rising by as much as 20 per cent.
The project is valued at $7bn, but the price of securing cont-ractors and equipment has risen since this estimate was made a year ago. Sources close to the project estimate costs have spiralled to $8.5bn.
Abdullah Busfar, vice-president of Maaden’s aluminium strategic business unit, admits costs have increased but would not say how much the project’s budget will now be.
“All the indications are that the cost will be higher,” he says. “I cannot yet give a precise figure. We are very near to completing a more precise estimate.
“In January, we will know the latest. But the only challenge we see to our project is securing the required manpower to complete the work without delays.”
Bids for the engineering, procurement and construction management contracts for the 720,000-tonne a year (t/y) aluminium smelter, and the 1.6 million-t/y alumina refinery, are expected to be submitted by the end of January 2008.
The US’s Bechtel and Canada’s SNC Lavalin have been invited to bid for the smelter contract. They have also been invited to bid for the alumina refinery contract, along with the US’ Fluor Corp-oration.
The contract to build the smelting complex’s 1,800-2,400MW power and desalination plant is the only one on the project to be tendered as a stand-alone engineering, procuring and construction contract.
Maaden will approach the financial community to secure project finance in the second half of 2008.
“We will have one project finance arrangement for the fully integrated project,” says Busfar. “It will be one of the largest in the history of the region.”
The financial adviser is Standard Chartered Bank. Saudi Arabia’s Public Investment Fund is also providing funds.
Meanwhile, work at the Al-Zabirah mine, which is supplying raw materials to the alumina smelter, has uncovered more bauxite than originally anticipated.
“This will enable us to continue operations for much longer than 30 years,” says Busfar.
“So we may expand the facility or enter the alumina market. It may prove to be more economical to smelt everything we can.”
Work on the aluminium complex is being undertaken in partnership with Canadian mining company Alcan, which was recently acquired by Australia’s Rio Tinto.
Busfar expects the formal joint venture agreement with Alcan to be signed early in the second quarter of 2008.
More projects in other areas are planned. “We are looking at developing our steel capacity.
“We are in the early stages but there are projects in the pipeline, not only to manufacture primary steel goods but engineered products too,” he says.