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Update on Magnesium International's Egyptian Smelter

  • The project team was relocated to Egypt in January 2006 and has now competed initial work to prepare the first phase of a revised capital cost estimate. The estimated cost of construction (including owner’s capital) has been reduced to US$290 million, in line with the original July 2005 Feasibility Study. The local Egyptian content has increased to 40%;
  • Further work is now planned to adopt self-perform project delivery techniques used widely in India and other low cost countries which have delivered projects at 30 – 40% below Western benchmarks for construction costs. This approach should further reduce the capital cost estimate by increasing the Egyptian/Indian content of fabricated equipment and through better contract pricing by improved engineering definition before obtaining fixed price packages;
  • Plant capacity has been increased from 88,000 tonnes per annum to 100,000 tonnes per annum magnesium metal which results in output of 108,000 tonnes per annum magnesium alloys, with limited additional capital cost. The increase follows a thorough review of the capacity and includes a 10% increase in the number of electrolytic cells. The plant will be constructed in two equal phases;
  • Following shareholder approval on 17 May 2006, EMAG has become a 100% owned subsidiary of MIL. Final settlement of the change of ownership is currently in process;
  • Arrangements have been finalised with Egypt Electricity Transmission Company for the supply of power for 15 years;
  • Work on defining the Sul Hamed magnesite deposit has indicated that the deposit should have the potential, with further exploration and testwork, in grade and quality for the first phase of the smelter which requires around 200,000 tonnes per annum of +40% MgO. The commercial supply arrangements are currently being negotiated.

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