Qatalum: the world's largest aluminium smelter
With no history of metal production, Qatar is now giving birth to one of the world's largest aluminium smelters. Riz Malik dissects the US$4.7bn Qatalum project, explains why it is symptomatic of Middle East project finance and traces its meandering history through to its recent financial close.
Project Summary
In an emirate as small as Qatar, the project [Transactions Database] in Ras Laffan, which also closed last month.
These volumes have become business as usual for banks and firms in the country, who have become used to remarkable injections of capital into an infrastructure industry that barely existed some years ago.
The Qatari government's announcement that it intends to spend US$130 billion on infrastructure projects, US$70 billion to be project financed, is no longer an awe-inspiring revelation for investors.
In 2007 thus far Qatar has raised a total of US$11.2 billion in debt with a total project value of US$13.6 billion in combined project value.
Even for an aluminium smelter, Qatalum may be one of the least risky projects to pass through the emirate.
The project at a glance
| Project Name | Qatalum aluminium |
| Location | Mesaieed Industrial City, Qatar |
| Description | The development of one of the world's largest aluminium smelters, comprising a 1,350MW power station, casthouse, carbon plant and dedicated jetty. |
| Sponsors | Qatar Petroleum and Norsk Hydro |
| EPC Contractor | SNC Lavalin |
| EPC for power plant | GE and Doosan |
| EPC Sub Contract 2 | ABB |
| Total Project Value | US$4.85 billion |
| Total equity | US$2.1 billion |
| Total senior debt | US$2.75 billion |
| Debt:equity ratio | 55:45 |
| Debt breakdown |
US$2.25 billion Term Loan |
| Pricing (above Libor) | 40bp (< completion) 60bp from (< completion to 8.5 years) 70bp (8.5 to 11.5 years) 85bp (thereafter) |
| Fees |
70bp upfront fee for commercial tranche and export credit |
| Tenor | 16.5 years |
| Mandated lead arrangers for commercial tranche |
Arab Bank |
| Mandated lead arrangers for letter of credit |
Europe Arab Bank |
| ECA | GIEK |
| Legal Adviser to sponsor | White & Case |
| Financial Adviser to sponsor | BNP Paribas |
| Legal adviser to banks | Skadden Arps |
| Technical adviser to the lenders | Mott MacDonald |
| Date of financial close | 23 August 2007 |
Request a Demo
Interested in IJGlobal? Request a demo to discuss a trial with a member of our team. Talk to the team to explore the value of our asset and transaction databases, our market-leading news, league tables and much more.