"This is the lowest-cost smelter on the planet; it gives us a good bump-up in our competitiveness," Kleinfeld said in an interview.
Alcoa has produced the first hot metal at its aluminium complex in Saudi Arabia, a project that allows the Pittsburgh-based company to significantly reduce production costs.
"The smelter gives us the opportunity to push ahead with its strategy for the upstream business of coming down the cost curve," chairman and ceo Klaus Kleinfeld said Wednesday in an interview from the complex in Ras Al Khair. "This is the lowest-cost smelter on the planet; it gives us a good bump-up in our competitiveness."
Costs have been kept low because the project is completely integrated, comprising a local bauxite mine, alumina refinery and aluminium smelter, plus a rolling mill – the only one in the Gulf region capable of producing food-grade can sheet.
The mill was originally slated to produce 380,000 tonnes per year, but the company broke ground on Wednesday on an expansion that will supply automotive aluminium, building and construction sheet, and foil stock.
Kleinfeld said the mill is on track to produce its first coil by December 2013.
The aluminium smelter at Ras Al Khair is ahead of schedule and on budget, Kleinfeld said. Its initial capacity will be around 740,000 tpy. The smelter will source bauxite and alumina from within Alcoa’s production system until the first commercial production from the mine and refinery in 2014.
Not all the aluminium production from the smelter is expected to be used at the rolling mill, Kleinfeld said. Some will be shipped.
Kleinfeld said Alcoa had a "unique opportunity" with the project, a joint venture with Saudi Arabian Mining (Ma’aden).
"There are very few places on the planet that allow you the opportunity of access to good-quality bauxite, gas for a refinery and to make electricity, and waterways out to the Indian Ocean and Europe. I can’t think of another place where this is possible," he told Metal Bulletin sister publication AMM.
"Saudi Arabia had a very strong dream and undertook an in-depth cost analysis on the opportunities open to it, understanding the diversification and growth advantages that aluminium can bring, along with employment and the ability to attract value-added clients such as the automotive sector," he said.
Jaguar Land Rover has already signed a letter of intent to explore the possibility of setting up an automotive facility in Saudi Arabia. Although discussions between the automaker and the Saudi government are at a preliminary stage, opportunities have been identified in aluminium component production.
The timeline of the project has been incredibly fast; the joint-venture agreement was signed just under three years ago, with groundbreaking for construction in June 2010.