The financial closure of Oman’s Sohar Aluminium Company (SAC) for funding the multi-billion-dollar project is expected by December. The term loan of US$1.46bn will be arranged by three lead arrangers – ABN Amro, Sumitomo and Citibank.

The company has reached an offtake agreement with Alcan for exporting products to various countries. Considered as the single largest industrial venture in the sultanate, SAC will have an installed capacity of 325,000 tonnes per year.

This is a new industry in Oman and the company is expected to offer 1,000 permanent job opportunities.

Sohar Aluminium recently signed an engineering-procurement-construction and management (EPCM) contract with Bechtel for setting up a US$2.3bn greenfield aluminium smelter project in Sohar Industrial Area.

Apart from the main plant, SAC will establish an associated carbon and casting facility and an 800MW gas-fired power project. Alston has been selected as the preferred EPC contractor for the power project. SAC will have a dedicated berth and storage facilities at the port for importing raw materials and exporting finished products.

The government’s investment arm Oman Oil and Abu Dhabi Water and Electricity Authority (ADWEA) each own a 40% share in SAC, with Alcan holding the remainder 20%.

The project is expected to start commercial operation by mid 2008, while full production is expected to be achieved by the end of 2008.

Alcan’s role is significant in the industrial venture as it would provide AP35 pot line technology, which is derived from its earlier AP30 technology. Hot metal from the smelter can be used by downstream industries directly, while around 60% of the company’s product is available for value addition by downstream industries.

The downstream industries include producers of windows and doors.
Some 28% of Oman’s 2.5mn population is in the Batinah region. Two-thirds of the sulatanate’s population is under 24 years.

Giving an update on the progress of Oman Petrochemical Industries Company (Opic), Bill Ray, chief executive officer of the company, says the petrochemical project would produce 1mn tonnes of high quality polyethylene per year to generate an annual turnover of US$1bn a year.

The construction work for the project is expected to start by May next year. “We will use a proven technology from Dow Chemical,” Ray adds. It will have a world-class gas cracker complex, ethane extraction facilities in Fahud and a 400km long pipeline to transport feedstock to Sohar. The company is jointly owned by the ministry of finance (25%), Oman Oil Company (25%) and Dow Chemicals (50%). Dow is the largest petrochemical producer in the world with an annual turnover of US$40bn.

The company will provide 700 direct employment opportunities for local people. Opic is committed to provide extensive training programme. It will also facilitate a cluster of plastic industries in the Sultanate, Ray says, adding that shareholders are committed. Ray also says that Oman has the advantage of availability of cheap natural gas, infrastructure facilities and motivated workforce for establishing a project of this magnitude.

Dow’s Business development director Theo Lecocq, claims that the plastic converting industry is the fastest growing industry in the Middle East. “Sohar is ideally positioned to establish a plastic cluster industry,” he adds.