A Heads of Agreement between Qatar Petroleum and Hydro was signed in Doha Sunday by Abdullah Bin Hamad Al-Attiyah, Second Deputy Premier, Minister of Energy and Industry, Chairman of the Board of Directors and Managing Director of Qatar Petroleum and Hydro’s President and CEO, Eivind Reiten.
Qatar Petroleum and Hydro are planning to develop one of the world’s largest aluminium plants in Qatar, an ideal location for serving growing markets in Asia, Europe and also North-America. Planned capacity of a first phase is 570,000 tonnes of primary aluminium.
Qatar Petroleum is a major producer of natural gas and has contributed to developing several industrial projects in Qatar based on its vast gas reserves. Primary aluminium production will represent a new step in industrial diversification in Qatar. For Hydro, one of the world’s three largest integrated aluminium companies, the project will be a major strategic investment, improving relative cost position in primary production and further strengthening its positions in global metal markets.
The planned project involves the construction of an aluminium metal plant, anode plant and casthouse, in addition to a dedicated power plant. Production will be based on Hydro’s reduction cell technology. The plant will be built in the Mesaieed Industrial Area, south of Doha.
The project is planned to reach full capacity during 2009.
Following the ceremony, Al-Attiyah stated: “Qatar is a strategic location for this project and has proven natural gas reserves of more than 900 trillion cubic feet, the world’s second largest reserves, representing secure and competitive supplies for power production. The policy of the government of Qatar is to utilize the country’s natural resources for economic and industrial development. Participation in a project for primary aluminium production fits this policy. Qatar offers a well developed industrial infrastructure and business climate. Excellent market flexibility between Europe and Asia, with a potential to serve the US market, ensuring highly competitive cost to market, makes Qatar a good strategic location for the production of primary aluminium.”
Hydro’s President and CEO, Eivind Reiten, stated that Hydro’s technology, competence and market positions will help leverage the value of the project. “A major primary aluminium production unit in Qatar will be a very important step to strengthen our position as a top tier global aluminium company. This project will also strengthen the good long-standing relationship between Hydro and Qatar. Hydro has operated successfully in Qatar for 35 years in close cooperation with Qatar Petroleum (the former Qatar General Petroleum Corporation). We are looking forward to developing and implementing the project, once the final negotiations and detailed engineering have been successfully completed,” said Reiten upon signing the agreement.
The project will consist of power generation, primary aluminium production and anode production, as well as a casthouse producing value added aluminium metal products.
To serve the aluminium production with required stable supplies of power, approximately 1,000 MW for the first phase, a new dedicated power plant will be constructed. The plant site is sufficient for more than a doubling of the primary aluminium production capacity, up to 1.2 million tonnes per year.
The power plant, as well as the primary aluminium plant, will be owned 51 percent by Qatar Petroleum and 49 percent by Hydro.
The product casthouse will have the capacity to produce value-added products from all of the pot room metal. As Hydro is a global leader in the production, sales and marketing of aluminium metal products, Hydro will be responsible for marketing all casthouse products through its global system. The casthouse will be owned 51 percent by Hydro and 49 percent by Qatar Petroleum.
Preliminary estimate for the total project is about US$3 billion. Hydro’s share of the investment is estimated to be around US$1.5 billion. The smelter is projected to have an investment per ton capacity in the region of US$4000, comparing favorably to other greenfield projects.