Saudi to start building export zone in August

Fertiliser project is expected to cost around US $1.9 b., while the aluminium plant will cost $4.4 b.

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By  Sean Cronin Published  April 23, 2005

The Saudi Arabian government is due to begin work in August on the Gulf coast industrial zone. It has future plans to build aluminium and fertiliser export plants on the site. The cost of the fertiliser project is estimated at US $1.9 billion, while the aluminium plant will require an investment of $4.4 billion. Both will depend directly on the construction of a $2 billion rail link from the northern phosphate and bauxite mines to Ras Al Zour, which is 60 km north of the existing Gulf coast industrial zone of Jubail. Abdullah Dabbagh, head of the state-owned mining firm Maaden, said the Ras Al Zour site will be levelled ahead of construction of the 640 000 tonnes per year aluminium smelter and 3 million tonnes per year di-ammonium phosphate plant. “With these two projects, this industrial city is the largest diversification which has ever happened in Saudi Arabia,” Dabbagh was quoted as saying in a news report. An 1800 megawatt station will power the site, which will process bauxite and phosphate from mines in the kingdom’s northern region. An ammonia plant, alumina refinery and six plants producing sulphuric and phosphoric acid will also be constructed on site. “There will be huge potential for downstream industries, including tie-ups with petrochemical products from Jubail,” added Dabbagh. “Ras Al Zour could also process minerals such as silica, magnesite, dolomite and calcium carbonates.” He went on to say that production costs for the aluminium should also be within the lowest quartile of global producers, and cheaper than nearest rivals in Dubai and Bahrain. Maaden plans to begin exporting fertiliser by 2008, and aluminium shortly after that. It will seek bids for construction of the phosphate-related plants by early 2006 and is in discussions with potential joint venture partners for the power and aluminium project. The company is also preparing to partially sell off its gold mining unit, which produces around 300 000 ounces of gold per year. The sale is scheduled to take place by the end of this year, subject to a cabinet decision on timing and scale. “The government feels the public has the right to own its own resources and the best way to do it is to put it in an initial public offering and give 40 to 50% to the people,” concluded Dabbagh.

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