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," Al-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, Al-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 per cent a year for the coming 10 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," Al-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, Al-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.

Al-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. - Reuters