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Chalco in $4.5b JV plant

By Chen Jialu (China Daily)
Updated: 2008-05-10 10:28

Chalco, the nation's largest aluminum producer, agreed on Friday to establish a joint venture with Malaysia's MMC and the Saudi Binladin Group to build and operate an aluminum smelter plant in Saudi Arabia.

Total investment in the plant, to be built in three stages, is estimated to be $4.5 billion.

Chalco's commitment in the joint venture ranks as China's largest investment in Saudi Arabia so far.

The aluminum producer, whose shares are traded both in Shanghai and Hong Kong, will own a 40 percent stake in the joint venture to become its largest single shareholder. Billionaire Syed Mokhtar Al-Bukhary-backed MMC will hold a 20 percent share, while a consortium of local investors led by the Saudi Binladin Group will hold the remaining stake.

The proposed aluminum smelter plant, located in the Middle East country's Jizan Economic City (JEC), will have an annual production capacity of one million tons of aluminum, Chalco president Luo Jianchuan said.

"The low electricity cost within the JEC will lower our production costs and enable us to offer competitively priced aluminum to meet the world's growing demand," Luo said.

Electricity costs an average of $20 per megawatt-hour in the Middle East, compared with $28 in the United States and $40 in China for the same measure, according to Fitch, an international rating agency.

An associated 1,860MW power plant will also be built, costing an estimated $2 billion. Chalco will take a 20 percent stake in the facility to become its third largest shareholder.