Trafigura in talks to build aluminum smelter in Egypt

Commodity trading giant Trafigura says it is in negotiations with the Egyptian Aluminium Company (Egyptalum) and the Metallurgical Industries Holding Company (MIH) to build a new aluminum smelter in Egypt.

Under a term sheet signed on Wednsday, the parties said they will look to establish a newly incorporated company that will construct, own and operate a 300,000-tonne-per-annum (tpa) primary aluminum smelter, alongside a 150,000-tpa anode plant, at Egyptalum’s Nag Hammadi complex.

Once built, the new facilities would nearly double the site’s current annual production capacity, Trafigura said.

$750-$900M investment

Trafigura will participate as a minority equity investor in the new company, as well as a debt provider and long-term offtake and feedstock supply counterparty. Total investment costs for the project are estimated at between $750-$900 million.

The new smelter would serve as an additional source of aluminum supply for an industry that has been rattled by the war in the Middle East. Strikes on key smelters in both the UAE and Bahrain have already crippled output in the Gulf region, which accounts for about 9% of the world’s supply.

While China has provided an alternative route for aluminum buyers globally, with its exports set to hit a record this year, most of its primary aluminum supply is still expected to remain within the domestic market due to Beijing’s existing tariffs.