UAE to build world's largest aluminum plant for US$6 billion.

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19 Feb 2006

Dubai Aluminium Co (Dubal) and Abu Dhabi's investment vehicle Mubadala agreed yesterday to invest six billion dollars to build the world's largest aluminium smelter.

The two entities will jointly build, own and operate the 1.2 million-tonne per year capacity smelter at Khalifa port in Abu Dhabi's Taweelah industrial zone, the statement said. The smelter will start operations in 2010 and will eventually have an annual capacity of 1.2 million tonnes, making it the largest of its kind in the world, said Abdullah Kalban, chief executive of Dubal. "This shows we are moving big-time into the global aluminium business and that defines our future strategy," Mubadala chief executive Khaldoon Mubarak told a news conference in Abu Dhabi.

Mubadala is one several UAE government-linked bodies making strategic investments to try to diversify an economy that relies heavily on energy exports. Mubadala's investments include a 5 per cent stake in automaker Ferrari. The energy-intensive aluminium industry is a key part of that diversification drive, especially with surging demand driving the prices for the metal up more than 40 per cent since September.

Last year Dubal took a 25 per cent stake in Canada's Global Alumina Corp and signed a $3.6bn deal with Larsen & Toubro to build plant in India. Dubai, one of the seven emirates in the UAE federation, is already a major exporter of aluminium, accounting for around half the Middle East's 1.3-million-tonne output in 2004.