A corruption scandal in Algeria has delayed a smelter project worth $5bn being built by UAE-based Emirates Aluminium (Emal) and worries over fuel allocations in Saudi Arabia have hit another $5bn smelter Emal is building in Saudi Arabia.

A source close to the Beni Saf Aluminium Smelter project in Algeria says the completion date has been pushed back from the third quarter of 2014 to the first quarter of 2015, following corruption allegations that have engulfed Emal’s joint venture partner, state-owned energy giant Sonatrach.

The allegations involve a number of senior managers at Sonatrach, including chief executive officer Mohamed Meziane, who was suspended after an investigation into contract irregularities (MEED 28:1:10).

“There is no question that the Sonatrach situation is a big issue and has set the project back,” the source says. “[The programme] lost a large part of 2009 and now it looks like it is going to lose about six months of this year.”

The production capacity for the first phase of Beni Saf has also been lowered from the original target of 750,000 tonnes a year (t/y) to 500,000 t/y, the source says.
“In the current climate, it is important to make a project as economically viable as possible,” he says. “Not even [US based aluminium giant] Alcoa could justify building a 750,000-t/y smelter at the moment. The aim is still to build a complex with an eventual total capacity of 1.5 million t/y, but the plan now is to do it over three phases, instead of two.”

Engineering, procurement and construction (EPC) contracts for the gas-powered smelter will be issued in 2011.

“EPC contracts will be put out to tender in the second quarter of next year, with a completion date of early 2015,” the source says.
Emal, a joint venture between Abu Dhabi sovereign wealth fund Mubadala Development Company and Dubai Aluminium Company (Dubal), has a 49 per cent share in the project, with Sonatrach taking a 51 per cent stake.

Meanwhile, a source close to the $5bn King Abdullah Economic City (KAEC) Aluminium Smelter in Saudi Arabia tells MEED that concerns over fuel allocations have forced the companies behind that project to lower the annual production capacity of its first phase.

Production will now be lower than the 700,000 t/y expected and the project will now be completed in three phases, instead of two. “It will be lower [than 700,000 t/y], but how much lower depends on the fuel allocation the project receives from the Saudi Oil Ministry,” says the source. “[The scheme] still plans to have a total capacity of 1.5 million t/y, but it will be conducted in three phases, each with a different capacity, depending on the fuel allocations.”

A banking feasibility study for the project will be conducted in 2011, with engineering, procurement and construction contracts to be awarded in 2012.
The KAEC Aluminium Smelter is being developed by Emal and Emaar, The Economic City, which is partly owned by the Dubai-based Emaar Properties.