Dubai’s largest aluminium producer DUBAL signed on July 24th a Term Loan Facility with Citibank, a member of Citigroup, worth a reported AED 734m ($200m) to fund a major plant upgrade.
The upgrade, announced on June 22nd of this year, aims to increase capacity at the plant an additional 174 000 tonnes per annum for a total capacity of 710 000 by 2006.
Shehzad Naqvi, regional head of Citibank, said the bank, a local member of the huge Citigroup, was "delighted" to be supporting the local economy.
"DUBAL is a proven performer with an exciting future. Citibank is delighted to have this opportunity to demonstrate its support of local business and to be a partner in the ambitions of local business for sustained growth," Naqvi said.
DUBAL CEO John S. Boardman, for his part, indicated the deal was a sign of growth to come.
"Our continued success demands a sound financial base and solid banking relationships. Citibank's support, together with the efforts of our other banking partners in the Kestrel project, provides an ideal platform for growth," he said.
The bank will also be responsible for an electronic payment system for Kestrel clients.
The Kestrel project will include upgrades of the plant, equipment and facilities, with an eye on environmental protection, a June statement from the company said.
The project will be completed in phases, with production coming online in the last quarter of 2003 and the facility's completion planned for 2006.
DUBAL is Dubai's singles largest non-oil industrial enterprise.
"The Kestrel Project will further increase DUBAL's importance as a key contributor to the national economy," Sheikh Hamdan bin Rashid Al Maktoum, the Dubai finance minister, said in June at the announcement of the upgrade.
The Kestrel plan involves both refitting existing equipment and installing new plant equipment, and technical upgrades of the plant’s smelters.
Aluminium projects of this kind in Dubai are a key aspect of infrastructure development package. Dubai Aluminium Company awarded a contract in early June of this year worth a reported $41m to France's Alstom to expand its smelter in Jebel Ali.
Aluminium is also a sticking point between the Gulf Co-operation Council (GCC) and the European Union as the two bodies try to iron out a future free trade deal.
A 6% EU duty on primary aluminium exports from GCC countries has dogged free-trade negotiations, with the EU accusing the UAE and Bahrain of "dumping." Two smelters in Bahrain and the UAE produce more than 1m tonnes per year.
The GCC has 45% of the world's oil reserves and is responsible for 20% of global crude production. All countries in the GCC are OPEC members, except for Oman and Bahrain.
A sticking point in negotiations between the two trading blocs, which is worth some $46bn annually, is over a 6% EU duty on aluminium imports from the UAE and Bahrain. The EU introduced the tariff on the grounds that it believed the Gulf states were "dumping" subsidised aluminium on the European market.
Meanwhile, on July 18th Saudi billionaire Prince Alwaleed told Reuters that he had bought $500m worth of shares in Citigroup this month. His total stake in the largest US financial services firm was brought to $10bn.
"Citigroup’s share price was attractive to buy," the prince told Reuters, and called it "the world’s most profitable company."