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| December 21, 2009
Alcoa Announces Partnership with Ma’aden to Develop Lowest-Cost Aluminum Complex in the World
NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE:AA) today announced it has formed a joint venture with
Ma’aden, the Saudi Arabian Mining Company, to develop a fully
integrated, world-class aluminum industry in the Kingdom of Saudi
Arabia. The joint venture will become the world's preeminent and
lowest-cost supplier of primary aluminum, alumina and aluminum products,
with access to the growing markets of the Middle East and beyond.
In its initial phases, the joint venture will develop a fully integrated
industrial complex, including:
-
A bauxite mine with an initial capacity of 4,000,000 metric tons per
year (mtpy);
-
An alumina refinery with an initial capacity of 1,800,000 mtpy;
-
An aluminum smelter with an initial capacity of ingot, slab and billet
of 740,000 mtpy; and
-
A rolling mill, with initial hot-mill capacity of between 250,000 and
460,000 mtpy. The mill will focus initially on the production of
sheet, end and tab stock for the manufacture of aluminum cans, and
potentially other products to serve the construction industry. It will
be one of the most technically advanced mills in the world.
The refinery, smelter and rolling mill will be established within the
new industrial zone of Raz Az Zawr on the east coast of the Kingdom of
Saudi Arabia. The complex will utilize critical infrastructure,
including low-cost and clean power generation, as well as port and rail
facilities, developed by the Kingdom’s government. Bauxite feedstock for
the planned alumina refinery will be transported by rail from the new
mine at Al Ba’itha, near Quiba, in the north. The project will be
developed and financed in two phases, with the rolling mill and smelter
in the first phase. First production from the aluminum smelter and
rolling mill is anticipated in 2013, and first production from the mine
and refinery is expected in 2014.
Capital investment is expected to be approximately SAR 40.5 billion ($US
10.8 billion), subject to the completion of detailed feasibility studies
and environmental impact assessments. Ma’aden will own 60 percent of the
joint venture. Alcoa will control the remaining 40 percent of the joint
venture through an investment partnership in which it will own 20
percent and its partners will participate through financing that
represents the other 20 percent economic interest. Each of Alcoa and the
partners will invest $900 million over a four-year period and will be
responsible for their pro rata share of the project financing, in
addition to specific completion commitments.
In welcoming the new venture, Dr. Abdallah Dabbagh, President and CEO of
Ma’aden, said, “Alcoa’s partnership in all aspects of this integrated
industry brings with it enormous value not only in terms of technology,
resources and experience but also a proven commitment to
sustainability.” He added, “A focus on quality alongside the robust
economics of the project will ensure its leading role in advancing Saudi
Arabia and the region as a major hub for the aluminum and downstream
sectors.”
Alcoa President and CEO Klaus Kleinfeld said, “This joint venture is a
once-in-a-generation opportunity for Alcoa, for Ma’aden and for the
Kingdom of Saudi Arabia. We are creating a fully integrated aluminum
complex that will be the most technologically advanced and cost
efficient in the world. By changing the operating dynamics and cost base
within our industry, the complex will be a model for the growth of
aluminum in competition with other metals and is designed with the
potential for future expansion. The joint venture leverages the unique
strengths of both Alcoa and Ma’aden to create substantial value for our
investors, customers and partners.”
Alcoa will provide know how, management expertise and support during the
design, construction and operation of the mine, refinery, smelter and
rolling mill. Alcoa will also arrange the supply of alumina feedstock to
the smelter from outside the Kingdom until the project refinery comes on
stream. Alcoa and Ma’aden will work with leading international and local
firms on the design and construction of the complex.
Ma’aden’s Chairman, Engineer Abdullah Saif Al-Saif, added that the Saudi
government’s investment in critical national infrastructure is proving
to be a catalyst for this and other projects. “The positive impact of
the government’s vision in developing the Kingdom’s infrastructure
including the new railway network and deepwater port at Ras Az Zawr is
clearly demonstrated by the realization of this industry and others such
as phosphate. Collaboration in clean efficient power generation also
ensures that it is both highly competitive and sustainable.”
About Alcoa
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum and alumina combined, through its active
and growing participation in all major aspects of the industry. Alcoa
serves the aerospace, automotive, packaging, building and construction,
commercial transportation and industrial markets, bringing design,
engineering, production and other capabilities of Alcoa's businesses to
customers. In addition to aluminum products and components including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems, precision and investment
castings, and building systems. The Company has been named one of the
top most sustainable corporations in the world at the World Economic
Forum in Davos, Switzerland, and has been a member of the Dow Jones
Sustainability Index for eight consecutive years. Alcoa employs
approximately 63,000 people in 31 countries across the world. More
information can be found at www.alcoa.com
About Ma’aden
Ma'aden was established as a Saudi Arabian joint stock company in March
1997 to facilitate the development of Saudi Arabia’s non-petroleum
mineral resources and to diversify the Kingdom’s economy away from the
petroleum and petrochemical sectors.
Ma’aden is engaged in the development, advancement and improvement of
all aspects of the mineral industry, mineral products and by-products
and related industries in Saudi Arabia. In July 2008 Ma’aden offered 50
percent of the company’s shares for subscription in a successful SAR
9.25 billion IPO.
Ma’aden has progressed towards realizing its vision of building a world
class mineral enterprise and its mission of being a profitable, publicly
owned, international mining company, while maintaining the utmost
concern for human resources, health and safety, environmental and social
issues.
About Ras Az Zawr
Ras Az Zawr is the location for Ma’aden’s minerals industry complex, a
77 square km site, 90km north of Al Jubail on the Arabian Gulf coast of
Saudi Arabia. In addition to housing the alumina refinery, aluminum
smelter and rolling mill for the Ma’aden Alcoa joint venture aluminium
industry, it is also the site for Ma’aden Phosphate Company’s integrated
chemical and fertilizer facility, due to begin operation in 2010. The
phosphate complex consists of a phosphoric acid plant, a sulphuric acid
plant, an ammonia plant, a DAP granulation plant, a co-generation plant
and desalination plant, as well as related infrastructure. It will
process phosphate concentrate brought by rail from Al Jalamid. This will
produce about 2.92 million mtpy of granular DAP, plus approximately
400,000 mtpy of excess ammonia and about 200,000 mtpy of excess
phosphoric acid. Ras Az Zawr also has 25 square kilometers of land set
aside for industrial expansion and downstream industry.
Forward-Looking Statements
Statements about the expected effects, timing, benefits, cost-structure,
capital investment, production dates, competitive advantages and
synergies related to the joint venture and all other statements in the
press release, other than historical facts, constitute forward-looking
statements. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date on which
they are made and which reflect current estimates, projections and
expectations. Alcoa disclaims any intention or obligation, other than as
required by applicable law, to update or revise any forward-looking
statements. Any such statements may be influenced by factors that could
cause actual outcomes and results to be materially different from those
projected or anticipated. These forward-looking statements are subject
to numerous risks and uncertainties. Important factors that could cause
actual results to differ materially from those in any such
forward-looking statements, many of which are beyond the control of
Alcoa and Ma’aden, include: (1) the risks associated with international
joint ventures of this nature; (2) the impact of economic and aluminum
industry conditions generally, including global supply and demand
conditions and fluctuations in London Metal Exchange-based prices for
primary aluminum, alumina and other products; (3) the risks associated
with large infrastructure construction projects; (4) adverse changes in
the financial markets affecting the ability of the joint venture to
implement its financing plans or to achieve financial close for the
various phases of the project; (5) the consequences of non-compliance
with the timeline and other requirements under the energy supply
arrangements for the joint venture; (6) the impact of legislative or
regulatory requirements applicable to the transaction, or changes in
such requirements, including changes in trade, tax, monetary and fiscal
policies and laws; (7) the impact of changes in accounting standards,
rules or interpretations; and (8) the impact of changes in foreign
currency exchange rates, competitive factors or political conditions and
risks in the U.S., Kingdom of Saudi Arabia or other countries relevant
to the joint venture and the parties. The actual results or performance
and expected benefits of the joint venture could differ materially from
those expressed in, or implied by, these forward-looking statements.
Accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will occur or be
completed, or if any of them do so, what impact they will have on the
results of operations or financial condition of Alcoa. For a discussion
of additional risks and uncertainties that may affect the future results
of Alcoa, please see Alcoa’s Form 10-K for the year ended December 31,
2008, Forms 10-Q for the quarters ended March 31, 2009, June 30, 2009,
and September 30, 2009 and other reports filed with the Securities and
Exchange Commission and available on www.sec.gov.
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