In a landmark strategic alliance, Dubai Aluminium Company DUBAL, one of the world’s largest aluminium producers, and Mubadala Development Company, a wholly-owned investment vehicle of the Government of the Emirate of Abu Dhabi, have signed a joint protocol (JP) and a joint development agreement (JDA).

His Highness General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Chairman of Abu Dhabi Executive Council, Deputy Supreme Commander of the UAE Armed Forces and Chairman of Mubadala Development, and His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, the UAE Minister for Finance and Industry and Chairman of DUBAL, were present at the signing ceremony. The JP was signed by HE Mohammed Al Bowardi, Vice-Chairman, Mubadala Development, and HE Ahmed Humaid Al Tayer, Vice-Chairman, DUBAL. The JDA was signed by HE Khaldoon Khalifa Al Mubarak, CEO, Mubadala Development, and Abdullah Kalban, CEO, DUBAL.

“This is an important strategic and historical alliance between DUBAL and Mubadala that will serve the UAE national economy and will capitalize on the excellent infrastructure already existing in the country. The alliance is in line with the vision and the directives initiated by The President His Highness Sheikh Khalifa bin Zayed Al Nahyan, and His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, and under the direct support of His Highness General Sheikh Mohammed bin Zayed Al Nahyan and His Highness Sheikh Hamdan bin Rashid Al Maktoum,” said HE Al Tayer.

HE Al Bowardi said the UAE has made formidable strides in every sphere of sustainable development, thanks to the unlimited support of President His Highness Sheikh Khalifa bin Zayed Al Nahyan and His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, “who are sparing no effort to ensure economic and industrial progress and to create wealth for the people of the UAE.” He described signing of the JP as a historic moment that heralds the new dawn of industrial and economic growth in the country and the region at large. “We are extremely pleased to have a quality partner of Dubal caliber in developing a leading edge project that will ensure effective and sustainable growth of UAE’s industrial sector. Having a partner with such experience, expertise and resource will certainly enable us to come up with a world class project. Both Mubadala and Dubal enjoy capabilities and resources to design, implement and run a project of that magnitude,” added HE Al Bowardi. “This is the first in a number of business synergies between Mubadala and DUBAL which will make the UAE a first-tier player and a global force in the aluminium industry,” said HE Khaldoon Al Mubarak.

The JP establishes a basis for the two companies to develop projects in the aluminium industry and for joint exploration of business opportunities in upstream, production and marketing aspects of aluminium industry. Besides, it will also promote the development of downstream businesses. The JDA entails construction and operation of a more than USD6-billion world class green-field aluminium smelter complex with 1.2-million tone capacity a year and related facilities at Taweelah in Abu Dhabi. This will make it the largest single site aluminium smelter in the world. The two entities will jointly develop, construct, own and operate the complex at the Khalifa Port and Industrial Zone in Taweelah. The smelter will be developed in two phases and the first phase is expected to be operational in 2010. The front engineering and design studies are scheduled to be completed in 2007.

“This collaboration is well-poised to achieve a huge success as it embarks on DUBAL’s industrial expertise as a global leader in aluminium production & marketing and Mubadala’s track record in successful structuring and financing of large scale projects,” HE Al Mubarak pointed out. “The combination of Mubadala’s expertise and DUBAL’s technical know-how and 26 years experience will greatly benefit the new venture. Besides, the UAE has already been consistently diversifying the national economy and projects such as this will generate substantial number of jobs for the UAE nationals,” Mr Kalban remarked.

Plans are already under way to establish a joint company with 50% stake each for Mubadala Development and DUBAL. The joint company will oversee the operation and management of the new aluminium smelter. Additionally, the JP provides the basis for Mubadala Development and DUBAL to explore in detail various investment opportunities along the entire aluminium supply chain such as alumina production, investment in existing production capacity and joint development in green-field smelters in the Middle East and North Africa (MENA) region. A joint steering committee with senior officials from both companies has already been formed to look into the possible business opportunities and to study the creation of a UAE-based center for excellence, research and development in aluminium industry. The steering committee is also mandated to study and develop the economic basis for other upstream and downstream integrated investment opportunities in aluminium industry such as production of calcined coke, development of aluminium rolling mills and possible applications in the automotive industry. Moreover, the deal between DUBAL and Mubadala will result in creation of more than 4,000 jobs, of which a large percentage will be taken up by UAE nationals.

The project will also add value to the local energy pool, creating an industrial venture which will have in excess of two million tones capacity as well as raw material production and downstream applications. “We do believe there is ample room for additional capacity on the back of strong international demand. Demand is growing at an annual rate of 4% or 1.3 million tones a year. This demonstrates the need to establish a smelter or two every year which is not happening in the world right now,” said Mr Kalban. “We plan to sign the joint venture agreement for the development of Abu Dhabi smelter within the next six to nine months.

Detailed studies and engineering aspects will be finalized within the next 18-20 months,” said HE Khaldoon Al Mubarak When completed and at full capacity, the new smelter will have 2,600MW of power. The joint venture company has already started negotiations for the required gas volume for the project.