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INTERVIEW: Saudi miner Maaden mulls expanding aluminum smelter to meet local demand

Dubai — Saudi Arabia's Maaden, the biggest Gulf miner, is mulling expanding its $10.8 billion aluminum joint venture with Alcoa to help meet demand for the local market, which consumes some 60% of total production, the company's chief executive told S&P Global Platts on Thursday.

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The smelter can be expanded because the refinery supplying alumina to the facility is not fully utilized, given it has a capacity to produce 1.8 million mt/year of the material, CEO Darren Davis said. The company can produce around 770,000 mt/year of aluminum, and around 230,000 mt/year of scrap and recycling material.

"There is an opportunity to expand [the smelter]," said Davis. "It is in an early stage though so we are still examining the opportunities there."

The six-member Gulf Cooperation Council region produced 5.3 million mt/year of aluminum in 2018, up from 5.15 million mt/year in 2017, according to World Aluminum. Total global production in 2018 was 64.34 million mt/year in 2018.

Major Gulf aluminum producers are upgrading or expanding their production to meet both local and international demand for their products.

In the UAE, state-owned Emirates Global Aluminum started production this month from its first $3.3 billion alumina refinery that will produce around 2 million mt/year to lower its imports by meeting 40% of EGA's alumina needs. Currently EGA produces around 2.6 million mt/year of aluminum from two smelters.

EGA is also building a bauxite mine in Guinea that will begin this year exports to the alumina refinery in the UAE as well as sales to other countries.

Aluminum Bahrain expects this year to reach 1.6 million mt/year of production with the addition of 540,000 mt/year of new capacity.

Maaden is also boosting its gold and phosphate production as part of plans to increase exports under a 2025 strategy, said Davis.

The company is investing Riyal 25 billion ($6.7 billion) to build a third phosphate project that will add 3 million mt/year by 2025 to the current capacity of 6 million mt/year, making the kingdom the world's second-largest exporter of the commodity, said Davis.

"Long-term phosphate is a great market to be in because phosphate demand is driven by agriculture, which is food," he said. "It is much less impacted by economic growth."

Gold production, the first commodity to be produced by the company, is expected to more than double to 1 million ounces/year by 2025 from over 400,000 ounces/year now. Maaden is ramping up exploration, the biggest such program in its history, in order to meet its 2025 target.

The company, which made this year its first acquisition with the purchase of 85% of African fertilizer distribution company Meridian, is hunting for more acquisitions to help market its phosphate production.

"We need to get a very large amount of products into the key markets around the world, which is South Asia, Latin America and Africa. So this acquisition gives us fantastic access into the eastern part of Africa," said Davis. "We want to make sure that as our phosphate business grows in the kingdom and increases production it actually has the channels to sell products into the key markets."

Maaden is also scouting the globe to buy copper assets to help develop its current small local production of the metal, said Davis.

Maaden is 65% owned by the Saudi sovereign wealth fund, the Public Investment Fund, and the remainder is listed on the local stock exchange. Last year its profit rose nearly 160% to Riyal 1.85 billion and revenue grew 17% to Riyal 14.2 billion.

-- Dania Saadi, dania.el.saadi@spglobal

-- Edited by James Leech, newsdesk@spglobal.com