Alcoa and Ma'aden Begin Product Mix

 

 

The new product mix will enable the two companies to produce about 100,000 metric tons of a wide range of downstream products favorable for the company’s complex product line. The project includes the best quality standards and ensures cost advantages, thus making Saudi Arabia one of the primary aluminum producers.

 

 

The project also takes into account the national strategy of developing national resources, thereby creating employment opportunities and national wealth. The project also replaces the imports with cost-effective, high-quality domestic products, while encouraging the expansion of the national industrial base.

 

 

Fluor, a global engineering company, will manage the development works while SMS Siemag will supply the mill equipment and heat treatment line equipment. The complex’s smelter and rolling mill are expected to begin production in 2013. The aluminum smelter is expected to have an initial capacity of 740,000 metric tons per year while the rolling mill will be within the initial capacity of 380,000 metric tons per year.

 

 

In addition to the smelter and rolling mill, the joint venture will include a bauxite mine with an initial capacity of 4 million metric tons per year and an alumina refinery with an initial capacity of 1.8 million metric tons per year. The first production of the mine and refinery is scheduled for early 2014. Alcoa will provide alumina feedstock for the smelter in the interim.

 

 

Currently, Alcoa retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. We have recommended the shares of the company as Neutral for the long-term (more than 6 months). The company faces stiff competition from Aluminum Corporation of China Ltd. (NYSE:ACH - News), Rio Tinto plc. (RIO) and BHP Billiton Ltd. (NYSE:BHP - News).