Aluminium Bahrain gets approval for $3.5bn expansion

Aluminium Bahrain (Alba) , owner of one of the world’s largest smelters of the lightweight metal, has won government approval for a larger than originally planned $3.5 billion expansion that will boost its output by more than 50 per cent.

The Line 6 expansion project is expected to boost Alba’s annual output by 514,000 tonnes to 1.45 million tonnes a year, the company said on Wednesday, with around half of the extra production to be sold to existing and new Bahraini customers.

Construction is expected to start in 2016 and production to begin in 2019, it said.

The production capacity approved by Alba’s board of directors is larger than originally proposed and will increase planned capital expenditure to $3.5 billion from $2.5 billion.

Alba appointed JP Morgan, Gulf International Bank and National Bank of Bahrain as financial advisors for the project, the statement said.

The proposed opening date for Line 6 was dependent on final approval for a gas pricing structure being received from the Bahraini government, though the statement did not say if a gas price agreement has been reached with the government.

The gas price Alba currently pays rose to $2.50 per million British thermal units on April 1 and increases 25 cents every year to 2021, with each increase costing Alba an additional $30 million.