Aluminum Corp of China (Chalco), the country's largest aluminium producer, has teamed up with Malaysia's MMC Corp and Saudi Binladin Group to co-invest in a US$3 billion aluminium smelter in the Middle East to tap cheaper power.
The three firms signed a memorandum of understanding yesterday to build a one million tonnes a year aluminium smelter, MMC, backed by Malaysian billionaire Syed Mokhtar Al-Bukhary, said in a statement to the Kuala Lumpur stock exchange.
The smelter forms part of MMC and Jeddah-based Binladin's plan for a US$30 billion, 30-year contract that their 50-50 joint venture won in November last year to build the 117 square kilometre Jazan Economic City.
The city, 725km south of the Red Sea port of Jeddah in Saudi Arabia, will attract investments to develop a seaport, an industrial zone, a commercial business district and residential communities.
Beijing-based Chalco, which is also the world's second-largest alumina producer, in October last year unveiled its intention to build smelters in the Middle East to take advantage of its energy resources to lower its electricity bill.
Energy costs US$20 per megawatt-hour in the Middle East, compared with US$28 in the United States and US$40 in China, according to rating agency Fitch Ratings.
'The low electricity tariff within Jazan Economic City will lower our production costs and enable us to offer competitively priced aluminium to serve the growing world market,' Chalco executive director and senior vice-president Luo Jianchuan said.