Saudi’s Western Way, US Gerald Metals sign $4bn aluminium dealadmin
Saudi Arabia’s Western Way For Industrial Development yesterday said it had signed three agreements with Gerald Metals of the US to help it develop an estimated $4bn aluminum complex on the country’s Red Sea coast.
Under the agreements, Connecticut-based Gerald and its affiliates will supply bauxite to Western Way’s aluminum refinery and offtake all aluminium produced at the smelter.
Gerald will also take a 20% equity stake in the project, Western Way said in an e-mailed statement.
Western Way’s complex, to be based at a new economic city planned at Jizan in southwest Saudi Arabia, will produce 1.6mn metric tons of alumina and 700,000 tons of aluminium annually.
The deal to provide high-grade tropical bauxite will make Gerald a key supplier of raw material to the project, whose main bauxite needs will be meet by Greece, Western Way said in the statement.
Under the offtake agreement, Gerald will purchase all the aluminium produced with an optional floor volume of 300,000 tons a year, according to the statement.
Gerald also agreed to provide about $800mn in equity for the project, Western Way said.
Gerald is a privately owned trading firm, financier and selective-participating producer of ferrous, non-ferrous and precious metals.
Western Way has raised $2bn in equity and plans to borrow the same amount from banks to finance its project, the company’s chairman, Abdullah Basodan, had said in an interview last month.
In April, Western Way signed contracts with China National Machinery Industry Corp, or Sinomach, and China Nonferrous Metals Industries Foreign Engineering and Construction Co, to build the aluminium complex.
Saudi Arabia and other Gulf countries – flush with cash from high oil prices – are using their funds to promote a wide range of industrial projects to diversify their economies and create jobs for their fast-growing populations.
Competitively priced energy due to an abundance of oil and gas resources is one of the Middle East’s main attractions for aluminium producers as they expand capacity to meet rising global demand, notably in fast-growing economies such as China.
Montreal-based Alcan in April signed a preliminary agreement with Saudi Arabian Mining Co, known as Maaden, for a proposed $7bn integrated aluminum project on the Gulf coast that includes bauxite mining, alumina refining, power generation and aluminium smelting.
Jizan Economic City, the fourth ”economic city” to be promoted in Saudi Arabia, was officially launched in November and is also set to feature a 400,000 barrel-a-day refinery.
Information from: www.gulf-times.com