Egypt has signed a strategic partnership agreement with global commodities trading giant Trafigura for a major expansion of the Nag Hammadi Aluminum Complex, with estimated investments ranging between $750 million and $900 million.

The agreement was signed between Metallurgical Industries Holding Company (MIHC), through its subsidiary Egyptalum, and Trafigura in the presence of Prime Minister Mostafa Madbouly, according to an official statement.

Doubling production capacity

The project includes construction of a new production line with annual capacity of 300,000 tonnes, which will double the complex’s total output capacity to 600,000 tonnes per year.

A new joint venture company will be established to develop and operate the project.

Financing will combine partner equity and debt from international financial institutions with EFG Hermes is acting as financial adviser

Trafigura will secure long-term alumina supply and market the aluminium output under long-term offtake agreements.

The expansion will be executed under a lump-sum turnkey EPC model to reduce risks related to cost overruns and delays.

Officials said the expansion comes amid growing global demand for aluminium - projected to expand from 1.3 percent per annum to 2.1 pervcent per annum - driven by Electric Vehicles (EVs) and packaging industries.

The project will deploy energy-efficient and environmentally compliant technologies aimed at lowering emissions and improving competitiveness in markets with stricter carbon regulations. The expansion is also expected to create direct and indirect employment opportunities in Upper Egypt.

Egyptalum is the largest primary aluminum producer in North Africa with a total annual capacity of 320,000 tonnes. Around 60 percent of its exports are destined for the European Union (EU).

Last month, Zawya Projects had reported that the European Bank for Reconstruction and Development (EBRD) is considering a senior loan of up to $80 million to Dandara Solar Power SAE, a special purpose vehicle (SPV) established by Norway's Scatec to develop a dedicated 500 megawatt (MW)/100 megawatt-hours (MWh) solar plus storage project in Nagaa Hammadi to supply clean energy to Egyptalum.

(Writing by Eman Hamed; Editing by Anoop Menon)

(anoop.menon@lseg.com)

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