DUBAI, 18 September 2005 — Dubai Aluminum Company (Dubal) yesterday signed a $3.6-billion joint venture agreement with India’s leading engineering conglomerate Larsen & Toubro (L&T) for a bauxite mining-cum-alumina refinery and smelter project in India.
The project is coming up in Orissa.
Dubal will have an equity share of 74 percent, with L&T holding the rest. The upstream integration project’s phase I consists of a 1.4 million ton annual capacity world class alumina refinery, bauxite mining and development of related infrastructure including a dedicated power plant, port facility, a township and other utilities.
The project, expected to be commissioned in the second half of 2009, will ensure supply of around one million tons of alumina per year, the principal raw material needed for Dubal. The financial closure is set to be achieved by the end of 2006 and construction will begin in 2007.
Phase II of the project will add a capacity to produce another 1.45 million tons per annum. The second phase also involves construction of an aluminum smelter utilizing Dubal’s own in-house developed technology. This phase is expected to cost around $2.5 billion, taking the total investment in the project to an estimated $3.6 billion.
The project has been approved by Deputy Ruler of Dubai, UAE Minister for Finance and Industry and Chairman of Dubal Sheikh Hamdan ibn Rashid Al-Maktoum, who had earlier reviewed the 10-year future program for Dubal.
It was decided to strategically position Dubal in the future development path with highly growth-intensive long-term initiatives. “This agreement reflects the unique economic relationship between the UAE and India and is considered the UAE’s largest foreign investment in the industrial sector in this country,” said Dubal Vice- Chairman Ahmed Humaid Al-Tayer.
“The Orissa project forms part of our 10-year future plan, which involves securing long-term supplies of key raw materials. Dubal will benefit from this alliance through L&T’s technical expertise and the track record of the private sector conglomerate,” he said.
“L&T has been focusing on developing business relations with GCC countries. This project being single largest foreign direct investment (FDI) in India by the UAE, will be fore-runner of many joint projects in the region. The project will bring substantial economic benefits to the people of Orissa including fresh employment generation and wealth creation,” said L&T Chairman and Managing Director A.M. Naik. “For Dubal, the project is seen as one way of safeguarding its investment in the smelting segment.
This project is an opportunity to partially secure raw materials supply for our capacity expansion programs,” said Dubal CEO Abdulla J.M. Kalban. L&T as an engineering major will have the responsibility for the construction of a major part of the project.