Egypt signs deal with Trafigura for aluminium smelter

Egypt has signed an agreement with global commodities giant Trafigura to build an aluminium smelter that aims to double the country’s annual production. 

Trafigura, based in Singapore, will build the smelter in the south-eastern Nag Hammadi city as a joint venture with state-owned Egypt Aluminum (Egyptalum).

The new smelter will cost $750-$900 million and have an annual production capacity of 300,000 tonnes, equivalent to Egyptalum’s current output.

“The agreement signed today reflects a clear vision for repositioning Egypt on the global aluminium industry map,” Hussein Eissa, deputy prime minister for economic affairs, said in a statement after the signing of the contract in Cairo on Wednesday.

“The project is a big leap in Egypt’s aluminium industry as it will double its current production capacity to 600,000 tonnes annually,” he said in comments published on the cabinet’s website.

Mohamed El-Saadawy, managing director of the holding company which owns Egyptalum, said the project comes at a time when the global market is experiencing a shortage in aluminium ore supplies.

Global demand has witnessed continuous growth over the past ten years, with an average annual growth rate of 1.3 percent, he said.

The market is expected to continue growing in the coming years at an annual growth rate of up to 2 percent by quantity and 3.5 percent by value, driven by rapid growth in sectors related to transportation, electric vehicles, packaging and other industries, he said, noting that the new project would be funded through Egyptalum’s own revenues and loans from the global market.

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Aluminium prices surged to near four-year highs at the end of March as Iranian airstrikes on two major Middle East producers in Bahrain and the UAE raised the risk of a prolonged supply shock.

Benchmark aluminium on ‌the London Metal Exchange (LME) was up 3.7 percent at $3,417 a metric tonne on March 30, according to Reuters.

This week, prices have been hovering between $3,522 to $3,563 per tonne on the LME, maintaining their level near four-year highs.