Saudi aluminium smelter delayed by Rio

JEDDAH, Saudi Arabia (Reuters)-Saudi Arabian Mining Co (Maaden) will delay by three years the start of production at a planned aluminium smelter, its chief executive said after mining giant Rio Tinto Alcan (RIO.L) abandoned the project. Rio Tinto Alcan (RIO.AX) said in December it had dropped plans to take a 49 percent stake in the $10 billion smelter because of the global financial crisis. "We are looking for the plant to be in production in 2015," Chief Executive Abdullah Dabbagh told Reuters in an interview. The two companies had initially announced plans to start production at the smelter in 2012. Maaden, in which the Saudi government is the largest shareholder, holds the remaining 51 percent in the capital of AlumCo. It Intends to develop a 740,000 tonnes per year aluminium smelter using bauxite from Saudi mines. Dabbagh said the firm remained committed to going ahead with the project but it would now be carried out in phases. "We are making presentations to our board with a new plan ... (it) is going to take place in two or three phases," he said late on Sunday. He declined to give further details on the changes to the project. Maaden has said that it could reconsider the size of the smelter in the light of the global financial crisis. In August, Dabbagh was quoted as saying the group planned to borrow as much as $8 billion in the third quarter of 2009 to finance the project. Maaden is investing 60 billion riyals ($16 billion) in projects including phosphate, bauxite, gold and industrial minerals. The investments are a crucial part of government plans to diversify an economy heavily reliant on oil export income. Dabbagh said one his company's projects, a $3 billion phosphate and fertilisers joint-venture with Saudi Arabian Basic Industries Corp (2010.SE), would be completely operational in 2011. SABIC and Maaden had said the project would start production in 2010. "The (SABIC) joint venture is going very well," Dabbagh said. "The project is under construction and we are almost 48 percent complete ... We are within budget and within time." "The challenge now is to operate the project and that will start in 2010 and more into 2011 for complete operation," he added.