Israeli Firm Delek Group Pondering Plan to Build 1 MTPA Aluminium Smelter

Israeli conglomerate Delek Group is weighing the prospect of building an aluminium smelting operation powered by natural gas. According to domestic media, the company is closing a feasibility study on a project that is expected to require a capital investment of roughly US$1.2 billion.

Local reportage on the subject reveals that Delek’s majority owner Yitzhak Tshuva consulted with Minister of the Economy and Industry Eli Cohen late last week to discuss the project. The proposal anticipates a smelter that turns out 1 million metric tons per annum, powered by a captive natural gas power plant capable of producing up to 1,600 mW, which is roughly a tenth of Israel’s entire electrical production at present. Such a power plant would be Israel’s largest gas-fired power plant, consuming between 0.7 and 2 BCM of natural gas per annum. The proposed plant will benefit from cut-rate fuel, as it is expected to burn natural gas from reserves in which Tshuva owns a part interest. Though the plant could singlehandedly satisfy fully half of the country’s yearly aluminium demand, 90 percent of its output will be sold to overseas consumers.

Although no official announcement regarding where such a project would be built has yet been made, the speculation is that Ramat Hovav, an industrial zone in southern Israel, the natural-gas-powered Mishor Rotem Power Station, and Eliat on the Red Sea are leading candidates for such a project. However, experts note that Eliat faces the handicap of not currently having suitable infrastructure to connect natural gas to the proposed plant. In any event, should the plant make its home in Israel, the government will allot land for the project without a tender.

The economic impact of such a plant is expected to be significant – projections have it employing 1,500 individuals and increasing the country’s exports by US$2 billion each year. However, such benefits will not be immediate, as the plan still lacks government approval, which it will require prior to beginning the expected two-year construction process. Financing for the project has yet to be settled, but foreign banks and possible partnership with a Chinese firm is among the speculated funding sources.

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