Last Updated :
26 May 2008 at 11:40 IST
Saudi mine to launch IPO, to issue 50% equities
Commodity Online RIYADH: Saudi Kingdom run Saudi Arabian Mining Company Ma’aden is all set to launch an initial public offering of 50 percent of its equity in July.
The IPO is expected to raise $2.47 billion and will provide the last link in the financing arrangements for the company’s huge aluminum project, said Ma’aden chief executive officer Abdullah Dabbagh.
The float represents the Middle East’s largest ever mining company IPO. The issue of 462.5 million $5.50 shares is half of Ma’aden’s stock and values the company at $4.9 billion.
JP Morgan Chase & Company is advising Ma’aden over the IPO which will be restricted to Saudi institutions and individual investors. The remaining Ma’aden stock will be held by the Public Investment Fund under the Ministry of Finance.
Escalating construction and material costs have complicated the finalization of the estimated $7.5 billion venture, which involves building a 670,000 tons-a-year smelter, alumina processing facility and 1,800 megawatt power plant, north of Jubail on the kingdom’s east-central coast at Ras Al-Zour.
Exploration activities in the Kingdom have identified the presence of over 50 gold and numerous base-metal deposits as well as valuable industrial minerals. As a result, Ma’aden was established in 1997 to bring together a number of diverse mining interests and develop the mineral resources of Saudi Arabia on commercial lines.
The materials Ma’aden will produce are going will be the basis for another massive downstream sector on top of the petrochemical one.
It will create vast numbers of jobs for Saudi nationals, create local service industries and offers the chance to create new businesses and partnerships for Saudi and international companies alike. The catalyst for all this potential is the mining and processing of two minerals - bauxite and phosphate.
Rio Tinto Alcan will own 49 percent of the venture and draw on a 30-year bauxite reserve, in northern Saudi Arabia at Az Zabirah, to supply the smelter’s alumina refinery.
Ma’aden is targeting 2012 for the smelter’s start-up. The project is a major diversification for Maaden which at present generates most of its income from gold mining in the Kingdom but this will be dwarfed by the aluminum project, as well as by a phosphate venture now being developed.
The phosphate project is being carried out with Saudi Basic Industries Corporation at a cost of $4.5 billion. This involves extracting phosphates in the Jalamid area of central northern Saudi Arabia and constructing a processing plant with a capacity to produce 3 million tons-a-year of di-ammonium phosphate fertilizer.
Exploration activities in the Kingdom have identified the presence of over 50 gold and numerous base-metal deposits as well as valuable industrial minerals. As a result, Ma’aden was established in 1997 to bring together a number of diverse mining interests and develop the mineral resources of Saudi Arabia on commercial lines.
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