Global commodities group Trafigura has entered into exclusive negotiations with the Egyptian Aluminium Company (Egyptalum) and the Metallurgical Industries Holding Company (MIH) to develop a new primary aluminium smelter, in Egypt, at a cost of between $750-million and $900-million.

The parties plan to establish a new company that will build, own and operate a 300 000 t/y primary aluminium smelter and a 150 000 t/y anode plant at Egyptalum's Nag Hammadi complex. When in operation, the new facilities will nearly double the site's current production capacity.

Trafigura will participate as a minority equity investor in the new company, as well as a debt provider and long-term offtake and feedstock supply counterparty.

It states that aluminium stocks globally are at historically low levels and that the new smelter will provide an important additional source of primary aluminium, supporting supply chain diversification and resilience across global markets, while underscoring the strategic importance of downstream processing.

“A significant milestone has been reached with the signing of the term sheet and the start of exclusive negotiations. We are pleased to be working with Egyptalum, a counterparty with proven expertise in the aluminium industry and to have the support of the Egyptian government through MIH.

"By building on existing facilities, Egypt has the potential to become a major producer, and we look forward to supporting the country in realising that ambition," says Trafigura metals and minerals head Gonzalo De Olazaval.

“This term sheet marks a defining moment for Egypt Aluminium. By partnering with a global commodity leader of Trafigura’s calibre – as both a strategic investor and long-term offtake partner – we are laying the foundation for Egyptalum to emerge as a leading primary aluminium producer not only in Egypt, but across the wider region.

"The expansion at Nag Hammadi will nearly double our production capacity, generate significant export revenues and create lasting value for our shareholders, our workforce and the communities we serve. We look forward to progressing this partnership towards financial close,” adds Egyptalum CEO Dr Mahmoud Abdelaleem Agour.

MIH chairperson Mohamed Al Saadawi says the entity is committed to supporting the success of this project, which represents one of the most significant industrial investments Egypt has seen in a generation.

“The signing of this term sheet is a powerful signal that Egypt’s industrial base continues to attract serious, long-term commitment from leading international private sector partners. Trafigura’s decision to co-invest alongside a State-owned entity like Egyptalum demonstrates the confidence that global capital has in Egypt’s economic trajectory and the strength of our industrial platform."