Sohar Aluminium Company received the “go ahead” for development of its RO 926 million ($2.4 billion) Greenfield smelter and power plant in Sohar in the Sultanate of Oman.

A signing ceremony for the major project agreements and financial close was held at the Grand Hyatt Muscat and attended by a number of ministers, shareholders, lender banks and representatives of both the public and private sector.

Among the agreements signed were the major shareholder undertaking agreements with Oman Oil, ADWEA and Alcan, the gas supply agreement, sea water intake and usufruct and subusufruct agreements for the smelter and power plant.

Earlier in the day, agreements were also signed with international and regional banks and financiers who will provide RO 563.5 million (US$1,460 million) non recourse term loan facilities with the balance funded by equity from shareholders. The term loan facility includes $240m Islamic finance, a first for a project in the Sultanate of Oman.

During the ceremony HE Maqbool Ali Sultan, Minister of Commerce & Industry and Chairman of Oman Oil thanked the shareholders, ADWEA and Alcan, for choosing to invest in Oman.

“The investment of ADWEA (Abu Dhabi Water & Electricity Authority) has come as a result of the bilateral and brotherly relations between the Governments of the United Arab Emirates and Oman.

“Alcan, as a global player in the Aluminium industry, will ensure that this is a world class project.” In terms of the financing of the project, HE stated that “this project also shows the success of Oman’s economy, political stability and investment regime that has attracted these international investors and the lender banks to this milestone project”.

Commenting on this momentous occasion HH Sheikh Diab Bin Zayed Al-Nahyan in his capacity as Member of the Emirate of Abu Dhabi Executive Council, Chairman of Abu Dhabi Water & Electricity Authority and on behalf of the Abu Dhabi Government

“This is a strategic project which represents a milestone in the path of bilateral brotherly joint cooperation between Abu Dhabi Government and the Sultanate of Oman.” He also commented, “We have the pleasure to work with a globally renowned company like Alcan and we are pleased to contribute to the project by providing technical assistance in the construction and operation of the power plant.” H.H. explained that ADWEA’s expansion strategy has come as result of its success in the privatization of the power generation sector H.H. said, “ADWEA is presently involved in similar projects with other countries of the region and this involvement will set the preliminary platform for the prospective GCC economic integration.”

Cynthia Carroll, President and CEO of Alcan Primary Metals Group, added:

“Today marks an important achievement for Alcan, its partners, and the Middle East Gulf region as we work together in creating sustainable economic, social, and environmental opportunities which will benefit all stakeholders, in particular the people of Oman.

“This state-of-the-art smelter will demonstrate Alcan’s technology and cost leadership, operational know-how and management expertise and will, over the smelter’s life, promote the strong technical and economic development of the region.”

On achieving this major project milestone, Tony Kinsman, CEO of Sohar Aluminium, said:

“Sohar Aluminium is expected to make a significant contribution to Oman’s economy by creating job opportunities for Omanis and by creating opportunities for support services and down stream industries”

Mr Kinsman also announced today the award of the power station contract to Alstom. The power station will have a capacity of 1000MW and will use combined cycle turbines.

Sohar Aluminium was formed in September 2004 .The Company will build a single AP35 pot line, together with associated carbon and casting facilities and a gas fired power station. The 350Kt smelter is expected to start production in mid 2008. Bechtel was appointed the EPCM contractor of the smelter in July this year. The shareholders of Sohar Aluminium are Oman Oil Company, Abu Dhabi Water and Electricity Authority and Alcan. For the first potline Oman Oil and ADWEA each own a 40% share of the company and ALCAN the remaining 20%.