MMC from Malaysia, the Saudi Binladin Group and CHALCO from China are to establish a jv to build a new aluminium smeletr and associated facilities at Jazan Economic City in Saudi Arabia.
Author: John Chadwick
Posted: Thursday , 04 Oct 2007

LONDON - MMC Corp Berhad (MMC) and the Saudi Binladin Group (SBG) signed a Memorandum of Understanding (MOU) with Aluminum Corp of China Ltd (CHALCO) to establish a second aluminium smelter at Jazan Economic City (JEC), Kingdom of Saudi Arabia. CHALCO is the sole producer of alumina in China, the second largest producer of alumina in the world, and among the top five largest producers of aluminium in the world.
The aluminium smelter will be developed by a new joint venture company to be formed by year end upon completion of a feasibility study. The plant will cost an estimated $3 billion and have an annual production capacity of some 1 Mt. CHALCO will ensure the provision of all required technologies for the project through its affiliate, China Aluminum International Eng Co Ltd (CHALIECO). CHALCO will also satisfy the plant's requirements for alumina supply as well as the offtake and distribution of the aluminium produced. Last year, China consumed 12 Mt of aluminium and this is projected to increase by 20% per annum. There is also enormous potential for downstream industries in JEC that use aluminium as base material for their products.
The construction of the second aluminium smelter is scheduled to begin during the second half of 2008. This deal follows an earlier proposal to establish JEC's first alumina refinery with an annual production capacity of approximately 1.6 Mt and an aluminium smelter which will have an annual production capacity of 600,000 t. The addition of the second aluminium smelter will mean that the generation capacity of the power plant at JEC will have to be increased. MMC Group Chief Executive Feizal Ali: "As JEC's joint master developer, MMC has the rights to build the power plant that will cater to both aluminium smelters as well as the other tenants at JEC. We will need to increase the generation capacity of the power plant from 3,000 MW, as initially envisaged, to 4,860 MW to cater to the needs of the second aluminium smelter. This additional capacity will raise the investment cost of the power plant from billion previously to almost billion."

MMC was awarded exclusive rights to develop and manage the new JEC in November 2006, together with SBG. Located 725 km south of Jeddah by the Red Sea, JEC is envisioned to be a fully integrated and self-contained development which will comprise industrial and non-industrial zones on a site measuring over 100 km2. Expressions of interest have been received from various investors for an oil refinery complex, an iron ore hub and steel cluster and a marine industrial complex, and work on some of these projects is due to commence towards the end of the year. In addition, JEC's industrial zone, representing more than two-thirds of the project, will also accommodate a port, a copper processing plant, a silica gravel refinery, a zinc processing plant and a metal fabrication facility.
CHALCO President Luo Jianchuan said "This is part of our efforts to develop new greenfield aluminium smelting capacity. The low electricity tariff within JEC will lower our production costs and enable us to offer competitively priced aluminium to serve the growing world market."
MMC, once a tin miner is now a utilities and infrastructure group with interests in transport and logistics, energy and utilities, and engineering and construction. CHALCO's business includes bauxite mining, alumina refining and primary aluminium smelting. CHALIECO, a wholly-owned subsidiary of CHINALCO, is a large scale enterprise in PRC for technical and propriety equipment research and development, engineering and general contracting. CHALIECO is the sole technology supplier in terms of aluminium smelting and alumina refining with its own intellectual property in China. SBG was founded in the beginning of the last century by "Al Muaalim" Mohamed Binladin in 1931 as a leading construction company.
John Chadwick is proprietor and editor of International Mining magazine -