Rio Tinto says its USD2.3 bln aluminum project is on schedule

Rio Tinto Alcan’s USD2.3 billion aluminum project in Oman, which will hold a production capacity of 365,000 tons per annum, is set to be completed in the first quarter of next year, the chief executive of the firm said on Monday. Richard Evans said the plant in Sohar, which is already 50 percent complete, would not be stalled by the dip in aluminum demand resulting from the global economic turmoil. Speaking on the sidelines of the Arab Aluminum conference and exhibition held in Dubai, he said the plant would have the potential to double its capacity within two years once sufficient supplies of gas were in place to power the plant. “The plant will have the single most modern potline and the single largest individual potline, so it is new technology that is pushing the envelope,” he said. But he said Rio Tinto, the world's second-biggest aluminum producer, was “taking a bit of a pause for a few months” to review the capital costs of a USD10.6 billion aluminum joint venture in Saudi Arabia with Saudi firm Maaden. He said Rio Tinto was assessing the correction in steel prices for the project, which would have a capacity of 700,000 to 720,000 tons per annum, with the potential to double that in the longer term. But he said he believed there would a slowdown in new aluminum projects in the Middle East because of the economic situation. Speaking earlier in the conference, Abdulla Kalban, president and chief executive officer of Dubai Aluminum Company Ltd (DUBAL), one of the largest industrial companies in the UAE, said in the last two months the global financial crisis had “rocked” the aluminum markets. “Prices have tumbled, inventories have risen substantially, deep uncertainty has ensued,” he said. “This uncertainty is a source of confusion. What begun as a slowdown in aluminum consumption in the second and third quarter of 2008 has become a significant decline in bookings.” He said globally some aluminum producers were struggling financially, smelters were closing and new projects were being delayed, without giving details. But Kalban said technological developments, the Gulf’s strategic location, energy reserves including abundant gas reserves, capital resources, infrastructure improvements and the availability of skilled workforce would help the region’s producers overcome the situation. He said the Gulf would have a total aluminum capacity of 5.7 million tons per annum by 2012, with Dubal producing one million tons and Aluminium Bahrain (Alba) also producing one million tons of the material.