Qatalum Aluminium Project To Commence Construction In 2007
Qatar Petroleum (50%) and Norsk Hydro (50%) announced on 19 July they had given final approval for construction of their Qatalum primary aluminum plant to begin later this year with the aim of achieving first production in late 2009 and reaching initial full 585,000 tons/year capacity in 2010. Qatar Petroleum and Hydro each holds 50% of Qatalum. The plant, at Mesaieed, will be the largest primary aluminum plant ever built in one phase and consist of a smelter, cast house and carbon plant as well as a dedicated gas-fired power plant with a capacity of approximately 1,250mw. The power plant will be supplied with gas by QP under a long-term contract. According to the shareholders, the capital investment estimate for the total Qatalum project is approximately $4.8bn, of which approximately $1bn is for the power plant. The revised cost estimate includes effects of a weaker US dollar. Firm contracts for 80-85% of the total expected contract value have been entered into. The site layout caters for a future expansion up to 1.2mn t/y capacity.
Preparations are under way at the site inside the Mesaieed Industrial City with detailed engineering to be completed in time for construction to start in November. Both power generation and anode production are scheduled to start up in September 2009. The first metal is scheduled for delivery in the fourth quarter of 2009. The plant will be in full production by mid-2010. Qatalum will have operating costs among the lowest in the industry, positioning it as a highly competitive global supplier. Assessment of the project’s profitability has been based on a long-term aluminum price of $1,800/ton. The product cast house will have the capacity to produce value-added products such as extrusion ingot and primary foundry alloys from all of the pot room metal. The full production from Qatalum will be marketed through Hydro’s global marketing network.
Qatalum has entered into long-term alumina contracts with Hydro and third party suppliers. The Norwegian company’s increased alumina requirements are being met by its participation in the third expansion of the Alunorte alumina refinery in Brazil, in which Hydro has a 34% share. When completed in 2009, Alunorte will have a total annual production capacity of approximately 6.5mn tons, making it the largest alumina refinery in the world. The Qatalum project will be financed by external debt in the amount of $2.75bn. The financing, which involves export credit agencies (ECAs) and 32 banks, is expected to close in August or September (MEES, 2 July). The remaining part of the investment will be equity financed. QP and Hydro have obtained commitments from a syndicate of financial institutions securing the debt financing of the project. The financing of Qatalum will be non-recourse to QP and Hydro after completion of the project. Following the final decision to proceed, Qatalum is now preparing for a Foundation Stone Laying Ceremony in November this year. Canada’s SNC-Lavalin was selected to carry out the $700mn engineering, procurement and construction (EPC) contract for the Services Area and Potroom Building in late 2006 (MEES, 4 December 2006).
