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Sun 2 May 2010 07:06 PM

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Saudi Alcoa awards contracts for $10.8bn venture

Contracts linked to the construction of Raz Azzour integrated aluminium complex.

Saudi Alcoa awards contracts for $10.8bn venture
FIRST CONTACTS: Swiss based ABB, USAs Fluor Corp and WorleyParsons have won the first contracts for a planned $10.8bn aluminium joint venture between Alcoa and Saudi Maaden. (Getty Images)

Swiss based ABB, US based Fluor Corp and WorleyParsons have won the first contracts for a planned $10.8 billion aluminium joint venture between Alcoa and Saudi Maaden. Maaden, also known as the Saudi Arabian Mining Co, said in a statement that the contracts awarded on Sunday are linked to the construction of the integrated aluminium complex at Ras Azzour. It did not give the value of the contracts.

WorleyParsons and Fluor won the supervision, engineering and procurements for the complex's alumina refinery to be completed by December, 2014, state controlled Maaden said.

ABB has been given 18 months to deliver electric power to the aluminium smelter and Fluor Corp was given a contract to oversee and complete the construction of the plant's rolling mill by December 2014, it added.

Fluor Arabia Ltd, the Saudi affiliate of Fluor Corp, also won a contract for management of services at the complex and engineering works and supervision of infrastructure at the site, Maaden said.

Ras Azzour is the biggest of the investments Maaden pledged to deliver in 2008 when it raised $2.47 billion in an IPO that was open only to Saudi investors. Saudi Arabia's three biggest state funds together hold 64 percent of Maaden's capital.

Maaden's deal with Alcoa provides for a 1.8 million tonne per year refinery, a 740,000 tonne per year smelter, a bauxite mine with an annual capacity of 4 million tonnes and a rolling mill with a capacity of up to 460,000 tonnes.

The smelter and mill were initially slated to start production in 2013 while the refinery and mine would come online in 2014.

Maaden launched last month a $7.5 billion project financing for the scheme to banks. The deal is part of a general uptick in project funding activity in the kingdom from a low point last year when just $1.9 billion of new commercial project funding was raised in the kingdom according to Thomson Reuters data.

Maaden and Alcoa are splitting the Ras Azzour plant financing into two between the smelter which will total $5 billion and the rolling mill which will total $2.5 billion.

Alcoa said last month that it was increasing its investment in the project after Maaden said its stake in the joint venture was raised to 74.9 percent and Alcoa's would be 25.1 percent.

Alcoa and Maaden had initially entered into a 60/40 agreement in December to build and operate the complex which integrates bauxite mine, alumina refinery, aluminum smelter and rolling mill.

Alcoa agreed in December to take a stake in the Ras Azzour plant after tight credit conditions forced Rio Tinto Alcan to abandon a 49 percent stake in a similar plan with Maaden about a year earlier.

Australia's Alumina Ltd is also a partner in the joint venture. (Reuters)

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