Italy’s Sace (CDP Group) has made €125m ($147m) of finance available to 40 Italian companies working on the Aluminium Bahrain (Alba) expansion project.
Sace says it will support Italian subcontracts for the construction of Power Station 5 at the Alba site, the construction of which was awarded to the US’ GE Power and Turkey’s Gama Power. Most of the Italian companies working on the project are small and medium sized enterprises specialised in machinery and components for the energy sector.
Power Station 5 will be connected to the under construction Line 6, which will make Alba as the largest single-site smelter in the world when it is completed.
Expected to start metal production in early 2019, the $3bn Line 6 scheme will boost annual production by 540,000 tonnes upon its full ramp-up, bringing Alba’s total production capacity to 1.5 million tonnes a year (t/y), making it the world’s largest single-site aluminium smelter.
Power Station 5 plays a crucial role in maintaining Alba’s competitiveness in the future.
The new power station will have a power generation capacity of about 1,800MW and will increase Alba’s efficiency when it comes to utilising gas. Gas is the main cost for Alba along with raw materials, so it will reduce the cost of metal per tonne.
Earlier this year, Alba secured $700m in commitments from export credit agencies (ECAs) for its Line 6 expansion project.
Those facilities are made-up of a dual tranche of approximately $310m and €315m Swiss SERV guaranteed export credit and a €50m from Germany’s Euler Hermes.
US-based Bechtel won the engineering, procurement and construction management (EPCM) for the Line 6 expansion scheme in April 2016. In addition to GE and Gama working on the power plant, Germany’s Siemens is working on the power distribution system contract.
The Alba expansion and other major projects are helping drive economic growth in Bahrain. The kingdom's real economic growth reached an annual pace of 3.4 per cent for the first half of this year, which is an improvement on the 3.2 per cent achieved during 2016 as a whole, according to the latest Bahrain Economic Quarterly published by Bahrain’s Economic Development Board (EDB) in November.
Non-oil GDP growth performed more strongly and quickened during the first half of this year to 4.7 per cent, from 4 per cent for the whole of 2016.
The EDB says the non-oil growth was almost entirely due to activity in the private sector, underscoring the strength of structural and counter-cyclical growth drivers in the Bahraini economy.
Alba's operations suffered a setback on 13 April this year after a three-hour power outage which is set to reduce production at the fifth reduction line for several months. The incident will result in a loss of 3-5 per cent of the smelters total production for 2017, Alba said in a bourse filing at the time.
The company restored power operations and reduction lines 1-4 resumed operations, but reduction line 5 ran at reduced rates. It is not expected to be fully operational until the third quarter of 2017, Alba said adding that the loss from the incident will be part of an insurance claim.
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