Qatar Petroleum and Hydro have signed an agreement to form a joint venture for the development, construction and operation of a world-class aluminium plant in Qatar. The agreement marks an important step forward to build one of the world's largest and most competitive primary aluminium plants.

The joint venture agreement was signed in Qatar’s capital Doha 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 President and CEO Eivind Reiten.

The signing of the joint venture agreement follows the heads of agreement between the partners, signed in December 2004.

A joint venture company, Qatalum, will be established to build and operate the primary aluminium plant – consisting of a smelter, a casthouse and a carbon plant – as well as a dedicated power plant. Qatar Petroleum and Hydro will each hold 50 percent of the new company. The plant is scheduled to start production in 2009.

The smelter will have an annual capacity of 585,000 tonnes of primary aluminium. The dedicated gas power plant has a planned installed capacity of 1,350 MW. The project, to be located in the Mesaieed Industrial City in Qatar, will be the largest initial phase greenfield aluminium smelter ever built. The plant could be expanded to an annual capacity of approximately 1.2 million tonnes.

Abdullah Bin Hamad Al-Attiyah stated: "Qatar offers the best conditions for this kind of industrial development. The policy of the Government of Qatar is to broaden the industrial base of the country, ensuring the best environmental standards and working conditions. Qatar is an ideal location for serving growing aluminium markets in Asia, Europe and also North America. The vast gas resources of Qatar, combined with the country’s ambition to diversify its industry, will ensure a long-term competitive aluminium plant."

"This project represents a key element in Hydro’s strategy to reposition our upstream aluminium business, expanding production in energy-rich parts of the world," said Eivind Reiten. "Qatalum will be an important contributor to improve Hydro’s relative cost position in production of primary aluminium and to meet the future growth in demand."

Construction is expected to begin mid-2007 with the first metal to be produced fourth quarter of 2009. Full production is expected to be reached mid-2010. The schedule is based on final build decisions to be made in 2007, following a phase of ongoing concept selection and detailed engineering.

The planned smelter will have operating costs among the most competitive in the world resulting in a robust project economy.

The product casthouse will have capacity to produce all of the smelter production as upgraded, value added, products; extrusion ingot and foundry alloys. The marketing will be handled by Hydro.

Hydro will supply its captive potroom technology, the global environmental benchmark in the aluminium industry. Hydro will also provide resources for the planning, construction and commissioning of the project. The partners are in the process of establishing the organization needed to execute the project.

© 2006 Mena Report (www.menareport.com)