A project for the construction of an aluminum production plant and natural gas power station by Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva, is nearing the end of a feasibility study. Last Thursday, the developer of the NIS 4 billion project met with Minister of the Economy and Industry Eli Cohen about the progress of this huge industrial venture.
It has not yet been decided, however, whether the project will take place in Israel, and if so, where. One potential location is in the south in Ramat Hovav, Mishor Rotem, or Eilat. Eilat is less likely, because the town lacks suitable infrastructure for a hookup for natural gas.
According to the plan, the plant will produce one million tons of metal a year. The energy-intensive factory will be built next to a power plant with a 1,600-megawatt capacity - one tenth of all the electricity produced in Israel. The power plant, which will use natural gas, will be Israel's largest gas-fired power plant, and will consume 0.7-2 BCM of gas a year from the Leviathan natural gas reservoir, of which Tshuva is one of the owners.
Aluminum consumption in Israel averages 50,000 tons a year; 90% of the plant's output will be designated for export. Countries near Israel consume two million tons of aluminum a year: Turkey 1.1 million tons, Italy 0.9 million tons, and Greece 0.2 million tons.
The new plant will increase natural gas consumption in Israel, thereby benefiting Delek Drilling Limited Partnership (TASE: DEDR.L), Tshuva's energy arm. In addition, the plant will benefit Israel's economy in a general way: it will employ 1,500 workers and increase exports by $2 billion a year. The achievement of this industrial enterprise, is a long way off, however: if it is decided to establish the project in Israel, the statutory stages will take years to complete, after which construction of the project will take an estimated three years.
The state will allot land for the venture without a tender. The cost will be financed through loans from foreign banks, and a strategic partner from China may be recruited for the venture.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 28, 2018
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