Trafigura takes minority stake in Egyptalum smelter expansion

Trafigura goes upstream: Commodities trading giant Trafigura has signed a term sheet to take a minority stake in a new project company alongside the Metallurgical Industries Holding Company (MIH) and Egyptalum, according to statements here and here (pdf) released last week. The expansion will carry an investment ticket of USD 750-900 mn and involves doubling the Naga Hammadi complex’s capacity to 600k tonnes per year by adding a 300k tpa primary smelter plus a 150k tpa anode plant.

Trafigura is coming in as minority equity holder, debt provider, long-term offtake partner, and the supplier of alumina feedstock, according to EFG’s statement.

Why is this important? Egypt has no functioning alumina refineries and currently imports the raw material to feed the Naga Hammadi smelter, which has historically left Egyptalum exposed to global alumina pricing and shipping cycles.

REMEMBER- Back in September, MIH and Egyptalum signed a non-binding MoU with Aluminium Bahrain (Alba) to study a USD 3 bn alumina refinery with a target capacity of around 2 mn tpa.

And why now? The International Aluminium Institute projects demand will grow 40% by 2030, with transportation alone adding 11.8 mn tonnes of new demand and electric vehicles accounting for some 63% of that growth. Supply isn’t keeping pace — global inventories are at multi-year lows, and new primary capacity remains limited by high capital costs, energy constraints, and environmental permitting. That’s the backdrop against which Trafigura is willing to lock in feedstock and offtake on a 25-year project.

ADVISORS- EFG Hermes is sole financial advisor, working on both the equity and the debt raise.