Alcan and Ma’aden sign heads of agreement for proposed US$7 billion "mine-to-metal" joint venture

Fully integrated project to include bauxite mine, alumina refinery,power plant and aluminum smelter in Saudi Arabia

Project Highlights:
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- 90 Mt bauxite reserve - representing a potential 30 years of mining
- 1.6 Mt/y alumina refinery
- Power plant delivering 1,400 MW to the project
- 720 kt/y aluminum smelter - with potential to expand to 2.1 Mt/y


Alcan announced today that it has signed a Heads of Agreement with Saudi
Arabian mining company Ma’aden to develop a proposed US$7-billion integrated
aluminum “mine-to-metal” project including bauxite mining, alumina refining,
power generation and aluminum smelting. Alcan would hold a 49-percent stake in
the project and would provide technology and operating management support,
with Ma’aden holding the balance of 51-percent ownership.
"Alcan is pleased to participate in the development of this outstanding
project in the growing and dynamic Kingdom of Saudi Arabia. This world-class
project has an ideal combination of competitive energy resources, local
bauxite, well-developed infrastructure and favourable logistics" said Dick
Evans, President and Chief Executive Officer of Alcan Inc. "Consistent with
Alcan’s primary metal strategy, this project has the potential to achieve one
of the lowest operating costs in the industry and become one of the world’s
largest smelters" he added.
The agreement was signed in Riyadh in the presence of His Excellency,
Engineer Ali Al-Naimi, Saudi Arabian Minister of Petroleum and Mineral
Resources and Chairman of Ma’aden, by Dr. Abdullah Al-Dabbagh, President and
CEO of Ma’aden and Michel Jacques, President and CEO of Alcan Primary Metal
Group.
His Excellency, Engineer Ali Al-Naimi said, "I welcome the partnership of
Alcan and Ma’aden in realizing this landmark project which will be one of the
largest, vertically integrated operations of its type in the world. The
operation will promote economic growth within the Kingdom of Saudi Arabia,
diversify the country’s economic and industrial base and create employment
opportunities through opening up new sectors of economic activity"
"Ma’aden’s mine-to-metal project complements our attractive pipeline of
projects in new regions for Alcan, including those at Sohar, Oman and COEGA
South Africa,“ said Michel Jacques. ”The project will be built on Alcan’s
unsurpassed technology, leveraging our unique combination of alumina and
aluminum capabilities, resulting in more energy-efficient and cleaner
processes. Furthermore, the smelter -- initially based on two AP 36 potlines
-- will be designed to accommodate a potential expansion of four additional
lines that could increase annual production to over two million tonnes" he
added.
Dr Dabbagh added, "This joint venture and our recently signed phosphate
agreement with SABIC represent notable milestones in Ma’aden’s vision of
expanding the scope of mining and associated industries in the Kingdom and
making mining the third pillar of Saudi industry, complementing Saudi Aramco
and SABIC, the Saudi Basic Industries Corporation. We are pleased to have
Alcan as our partner for this project. Alcan’s global experience combined with
their team’s strong operating capabilities will prove vital in delivering long
term success"
As one of the world’s largest vertically integrated projects of its kind,
the initial operations feature a power plant delivering 1,400 megawatts; a
90 million tonne bauxite reserve located in Az Zabirah in northern Saudi
Arabia representing a potential 30 years of mining; an alumina refinery with a
capacity of 1,600 thousand tonnes per year; an aluminum smelter with a
capacity of 720 thousand tonnes per year, and will leverage Saudi Arabia’s
port facilities and infrastructure. The alumina plant, aluminum smelter and
power generation facilities would be located in the new Minerals Industrial
City at Ras Az Zawr, on the east coast of Saudi Arabia. First metal would be
expected during the first quarter of 2011, and first alumina a year later.
Next steps will include completing the joint venture agreement and
pursuing project financing arrangements for capital costs.

Ma’aden was established as a Saudi Arabian joint stock company in March
1997 and is presently owned 100% by the Saudi Government. Its purpose is to
facilitate the development of Saudi Arabia’s non-petroleum mineral resources
and to diversify the Kingdom’s economy away from the petroleum and
petrochemical sectors. Ma’aden is engaged in the development, advancement and
improvement of all aspects of the mineral industry, mineral products and
by-products and related industries in Saudi Arabia.