DUBAI, April 9 (Reuters) – Aluminium Bahrain
(Alba) is close to selecting the financial adviser for its $2.5
billion Line 6 expansion project, having whittled down its
choice to two banks, its chief financial officer told Reuters.

The scheme will make Alba the largest single-site aluminium
smelter in the world by boosting per-annum production by 400,000
metric tonnes, at a time when demand for the metal is growing,
Ali al-Baqali said in an interview at the plant.

Alba, at the centre of an aluminium industry which
contributes around 10 percent of Bahrain’s GDP, retendered the
adviser role after a contract with BNP Paribas waned
in October.

“We short-listed a few banks and as of today, we are
evaluating the final two proposals,” Baqali said, without naming
the banks involved.

The proposed opening date for Line 6, which will increase
Alba’s annual capacity to around 1.3 million metric tonnes, is
dependent on final approval for the gas pricing structure being
received from the Bahraini government, Baqali said.

Should this come in the second quarter, production would
commence around the end of 2018, he added.

“Growth is expected to revolve around 5 percent a year for
the coming ten years, so there is strong global demand. And
there is no more capacity in the industry, so this is the right
time to have Line 6,” Baqali told Reuters.

COSTS

The gas price is key to the costing of the project and the
size of power plant needed to run the new potline: a high price
would require a larger and more efficient station, raising the
cost above the provisional $2.5 billion mark.

The gas price Alba currently pays for its existing
operations rose to $2.50 per million British thermal units on
April 1 and gains 25 cents every year to 2021, with each
increase costing Alba an additional $30 million, Baqali said.

Alba is also evaluating options to help meet its increased
demand for alumina, which rises to 2.5 million metric tonnes a
year once Line 6 starts up from 1.8 million metric tonnes
currently.

Baqali said it was looking for either a joint venture with
one of the major alumina suppliers or a take-off agreement from
their refineries.

“We got some opportunities which we are studying but,
currently, we didn’t see any good assets,” he said.

(Editing by Elaine Hardcastle)