(AA) Alcoa & Saudi Arabian Mining Company, Ma’aden Secure $1 Billion Loan

Saudi Arabian Mining Company, Ma’aden and Alcoa Inc. (AA) have secured $1 billion loan from Public Investment Funds (PIF) for phase II of aluminum project in Saudi Arabia. The loan amount will finance the Ma’aden Bauxite and Alumina Company, which is owned 74.9% by Ma’aden and 25.1% by Alcoa.

Ma’aden Bauxite and Alumina Company consist of a bauxite mine and an alumina refinery with an approximate cost of $3.6 billion. This is the second phase of the $10.8 billion Ma’aden-Alcoa joint venture project.

The project is a part of the $10 billion Ma’aden-Alcoa joint venture project that includes the construction of an aluminium smelter and rolling mill at Ras Az Zawr.

Construction work was scheduled to commence on the plant in July 2010. Ma’aden expects the smelter and rolling mill to be operational in 2013 with the mine and refinery coming on stream in 2014. Bauxite feedstock for the planned alumina refinery will be transported by rail from the new mine at Al Ba’itha, near Quiba in the north of the kingdom.

About 60% of the phase II of the project worth $2.163 billion, will be financed through the Public Investment Fund, Saudi Industrial Development Fund, and other financial institutions and commercial banks. The remaining $1.442 billion will be financed by project partners, Ma’aden and Alcoa on a pro-rata basis, as told by the mining company to the investors through the Tadawul stock exchange.

US-based engineering firm Fluor will handle the project, which will be carried out in three phases, as a main contractor.

As part of Alcoa’s Wheel and Transportation Products business based in Cleveland, Alcoa plans to install an advanced aluminum recycling and casting process to reduce energy consumption and greenhouse gas emissions as part of a $21 million expansion at the company’s Barberton, Ohio plant.

The investment at the facility is expected to add 30 full-time jobs and help protect the plant’s more than 350 existing positions. Alcoa will use the new technology to produce billet from re-melted scrap aluminum in order to produce new wheels while increasing efficiency by 25%.

In addition, Alcoa is partnering with the Global Reporting Initiative (GRI) to develop the next generation of corporate sustainability reporting guidelines that will shape the way corporations around the world define, deliver and measure their sustainability performance.

Currently, Alcoa has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term (6 months) Neutral recommendation.

Alcoa faces stiff competition from Aluminum Corporation Of China Limited (ACH), Rio Tinto Plc. (RIO) and BHP Billiton Ltd. (BHP).

ALCOA INC (AA): Free Stock Analysis Report

ALUMINUM CP-ADR (ACH): Free Stock Analysis Report

BHP BILLITN LTD (BHP): Free Stock Analysis Report

RIO TINTO-ADR (RIO): Free Stock Analysis Report

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