Power delay hits smelter


Published — Wednesday 28 November 2012

Last update 28 November 2012 1:02 am

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ALKHOBAR: Saudi Arabia's first aluminum smelter will reach full production more slowly than planned due to long delays to a power plant it needs to run flat out, one of the owners of the $ 10.8-billion complex said yesterday.
Saudi Arabian Mining Company (Maaden) expects to begin operations at the aluminum smelter it shares with US-based Alcoa in December and has secured some of the huge amounts of electricity it will need. But it will be unable to ramp up to 740,000 tons per year of smelting capacity because the 2,400-megawatt (MW) power plant due online in October will not be ready until late 2013.
"The (power) project halt may cause shortage in the supply of electricity required by the Maaden Aluminum Company (MAC) at Ras Al Khair," the company said in a stock market statement.
"The impact on the project will lead to a slowdown in the scheduled ramp up to reach the designed capacity of the aluminum smelter," Maaden said shortly after Reuters reported the power plant start up had been delayed by about 10 months.
Maaden stock fell to a low of SR 30.60 on the news before recovering to SR 31.00 by market close in Riyadh, down 2.21 percent from Monday.
Maaden and Alcoa teamed up in 2009 to build the world's largest integrated aluminum complex at Ras al-Khair, which is fast becoming a mining centre on the Gulf coast of Saudi Arabia.
But, in a country which struggles to meet demand for electricity in summer when air conditioning demand spikes, the two partners are now facing long delays to the power plant they were banking on to supply most of their electricity.
"First production of electricity was supposed to be in October 2012... We are anticipating a 10-month delay," the head of state-run Saudi Saline Water Conversion Corp. (SWCC) said.
"To overcome this delay SWCC has taken the responsibility to provide power to the grid in excess of 450 MW to meet client demand," SWCC chief Abdulrahman Mohammed Al-Ibrahim said.
Saudi Arabia's Al Arrab Contracting Co. and China's Sepco III Electric Power Construction Corp. were contracted by SWCC to build the power plant. Neither was available for comment.
Maaden's aluminum complex has rights over 1,350 MW of the power plant's capacity and the other 1,050 MW has been allocated to Saudi Electricity Co. (SEC).
Maaden said on Tuesday it had secured some electricity from state utility SEC to minimize the impact of the power plant delay, without saying how much supply it had secured.
The project 90 km to the north of Jubail is to refine bauxite ore to produce 1.8 million tons a year of alumina from 2014 for processing in the smelter.
Alumina will be imported to supply the smelter while the refinery is still under construction.

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