Alcoa, Ma'aden Set Sights High

NEW YORK (TheStreet) -- After Alcoa(AA) and the state-owned Saudi Arabian mining company Ma'aden broke ground last week on what they hope will be the world's largest fully integrated aluminum complex, it's worth making a quick review of this significant joint venture.

The $10.8 billion project consists of a bauxite mine, alumina refinery, aluminum smelter and rolling mill on the Arabian Gulf coast.

Recently, Ma'aden received board approval for $4.5 billion financing for the project.

Alcoa entered into the joint venture with Ma'aden in December. The partners hope to create the world's lowest-cost aluminum complex, benefitting from plentiful energy supplies in Saudi Arabia.

The complete facility, which is 74.9% owned by Ma'aden and 25.1% by Alcoa, is expected to start its operations in 2014.

Alcoa and Ma'aden have both swung to profits in the latest quarter. For the second quarter 2010, Alcoa registered income from continuing operations of $137 million, or 13 cents per share, vs. a year-earlier loss of $312 million, or 32 cents per share. Also, Ma'aden reported an $8.33 million profit for the second quarter of 2010, compared with a net loss of $1.74 million a year ago.

In May 2010, the subcontracts for the initial construction phase were awarded to three other companies. ABB(ABB) has been awarded a contract to deliver electric power to the aluminum smelter, and WorleyParsons and Fluor(FLR) won the supervision, engineering and procurement contracts for the complex's alumina refinery.

Alcoa estimates that it will reap benefits from this project based on its projections of strong aluminum prices in the long run.

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