ALUMINUM Corp of China Ltd said a joint venture smelter project in Saudi Arabia would cost 50 percent more at US$4.5 billion, after a power plant was included to take advantage of low energy costs.
The company, also known as Chalco, last year agreed with Saudi Binladin Group and Malaysia's MMC Corp to build a 1-million-ton-a-year aluminum smelter costing US$3 billion.
Chalco said in a statement filed to the Shanghai Stock Exchange yesterday that total cost is expected to be around US$4.5 billion and a company spokesman said the construction of the power plant is the main reason for the cost increase.
Chalco will own 40 percent of the smelter as the largest shareholder, it said in the statement. The project, in Saudi Arabia's Jizan Economic City, will be completed in three stages. The Beijing-based company also said it will own 20 percent of a 1,860-megawatt associated power plant as the third-largest shareholder.
This project is a major step by the aluminum firm to tap overseas energy and move into resource-rich areas to supply the aluminum industry, said Chalco, China's largest maker of the metal that is widely used in aviation, packaging, construction as well as cooking utensils.
Power typically accounts for about 25 to 30 percent of the total cost in primary aluminum production, according to Fitch Ratings. The Middle East has emerged as a key region for future aluminum output. Fitch has forecast the Middle East to double its current output of 2 million tons by 2011.
Chalco rose 2.26 percent to 22.65 yuan (US$3.24) yesterday. The Shanghai Composite Index closed 0.37 percent higher at 3,626.98.