November 26, 2007 -- MMC Corporation Berhad (MMC) (KLSE:9194) Monday announced that its wholly-owned unit, MMC International Holdings Limited, has signed an agreement to build and operate an aluminum smelter with associated anode plants in Jazan Economic City (JEC) in Saudi Arabia at an estimated cost of US$3 billion.

MMC International on Nov 24 signed the agreement with its partners, Saudi Binladin Group (SBG) and Aluminum Corporation of China Limited (CHALCO), to develop, own and operate the smelter that will have an annual production capacity of about one million metric tons.

The agreement was among six signed last Saturday during the groundbreaking ceremony for the JEC, which also marks the start of construction work.

The construction of the smelter as well as a power plant is expected to begin during the second half of 2008 for completion in 2012, MMC Corp, the utilities and infrastructure group, said in a statement to Bursa Malaysia.

Under the agreement, the plant will be developed by Sino-Saudi Jazan Aluminum Limited, which will be jointly owned by Chalco (40 per cent), MMC (20 per cent) and a Saudi consortium including SBG (40 per cent).

This definitive agreement follows the signing of a preliminary MOU on October 4 to establish the smelter at JEC.

CHALCO will supply the alumina requirements of the smelter project and will also guarantee the offtake and distribution of the aluminum produced subject to terms and conditions to be agreed by the parties.

The technology required for the smelter will be provided by China Aluminum International Engineering Co., Ltd, which is an affiliate of CHALCO.

In order to meet the power requirement of the smelter, the parties intend to build a power plant with a capacity of 1,860 MW, which is estimated to cost US$2 billion

The parties will establish a separate joint venture company to undertake the power plant project.

Chalco is the sole producer of alumina in China, the second largest producer of alumina in the world.

Explaining the rationale for MMC's investment in the smelter, MMC Group Chief Executive, Feizal Ali said, "For MMC, this is an attractive investment that meets our risk profile and investment returns."

He said MMC intends to own at least 50 per cent of the power plant, which will form part of a larger power plant complex that is planned to have an eventual generation capacity of about 5,000 MW.

"This is a major undertaking for us that will ensure a significant recurring income stream for MMC," he said.

"The construction of the aluminium smelter and power plant is scheduled to begin during the second half of 2008 and be completed in 2012," he said.

Source: Asia Pulse