By Luke Pachymuthu
UPDATE 1: All projects including Rio Tinto joint venture to be reconsidered next month - CEO.
A $10.6 billion aluminium joint venture between Rio Tinto and Saudi Arabian Mining Co (Maaden) is under review because of the global financial crisis, a Maaden executive said on Tuesday.
Speaking at an industry conference in Dubai, Maaden Chief Executive Abdullah Dabbagh declined to give a timeframe for decisions on the plant, to be built in the kingdom, but said other projects were also being reconsidered because of the credit crunch and economic slowdown.
"All projects will be reviewed in light of the impact of the current financial crisis," he said. "We haven't decided to delay the project. A delay is one of the options, but that is to be decided later... Within the next month or so we are going to review [it] to optimise the economics of the project."
He added: "The important message here is that mining is an important long-term activity, there may be some short-term financial uncertainty, but we assume that its only going to last a year or a couple of years, but we still have to plan for the long term," Abdullah said.
He said a phosphate project involving Rio and Maaden is in the construction phase and is on schedule to start running by the end of 2010, along with the railroad linking the project to the country's export centres.
Maaden said in July the venture was still viable despite a 40 percent increase in costs. Dabbagh was quoted as saying in August the group planned to borrow as much as $8 billion in the third quarter of next year to finance the project.
The aluminium smelter will now have an annual production capacity of 740,000 tonnes instead of 650,000 tonnes, Maaden said.
It was the second time Maaden revised up the project's cost, which it raised in May to $7.53 billion from $7 billion.
Rio Tinto has said it had put on hold its aluminium smelter project in neighbouring Abu Dhabi, pending a review by the Gulf emirate's government of its energy requirements. (Reuters)