Alcoa increasing investment in Saudi project

* Maaden to own 74.9 pct, Alcoa 25.1 pct of aluminum JV

* Alcoa capital investment to be $1.1 bln over 4 years

* Alcoa stock down

By Steve James

NEW YORK, April 5 (Reuters) - Alcoa Inc  said on Monday it is increasing its investment in a planned $10.8 billion aluminum complex in Saudi Arabia after some of the U.S. company's partners in a consortium dropped out.

In a change in the ownership structure, Alcoa will now pay about $1.1 billion over four years, up from the $900 million it had said in December, a filing with the Securities and Exchange Commission shows.

State-run Saudi Mining Co (Maaden) said on Saturday it will own 74.9 percent of the joint venture and Alcoa's stake will be 25.1 percent. But, according to the filing, Alcoa has an option to increase its stake by a further 15 percent.

Asked if Alcoa's consortium partners had dropped out of the project, company spokesman Kevin Lowery said that apart from Australia's Alumina Ltd  “all our partners are out.”

"It's part of any project like this, adjustments are going to be made,” he told Reuters.

Alcoa said in December it would control its portion of the project through an investment partnership in which it would hold 20 percent. It and its partners were each to contribute $900 million over four years, Alcoa said at the time.

In the original filing in December, Alcoa did not identify  its partners, but said they were grouped in an entity called Aluminum Financing Ltd.

There has been concern recently that global demand for aluminum since the 2008 recession has not rebounded as quickly as that of steel and other metals. The price of the metal plummeted 18 months ago from highs of about $3,300 per tonne, and has only slowly risen again to around $2,300 on Monday.

Analyst Tony Robson of BMO Capital Markets in Toronto said he had not forecast high returns despite the fact Alcoa said the project would be low-cost because of plentiful energy supplies in Saudi Arabia.

"Capital costs are high, so yields will depend on high metal prices,” he said. “But, by the time they build it, metal prices might be up.”

Alcoa and Maaden entered into a 60/40 agreement in December to build and operate an integrated bauxite mine, alumina refinery, aluminum smelter and rolling mill in Saudi Arabia.

The affiliate that will hold Alcoa's interests in the smelting company and the rolling mill company will be wholly owned by Alcoa. Alcoa will own a 60 percent interest in the mining and refining company, with the rest being held by  Alumina Ltd, the filing said.

Alcoa agreed in December to take a stake in the Ras Azzour plant after tight credit conditions forced Rio Tinto Alcan  to abandon a 49 percent stake in a similar plan with Maaden about a year earlier.

Ras Azzour is the biggest of the investments Maaden pledged to deliver in 2008 when it raised $2.47 billion in an IPO that was open only to Saudi investors. Saudi Arabia's three biggest state funds together hold 64 percent of Maaden's capital.

Maaden's deal with Alcoa provides for a 1.8 million tonne-per-year refinery, a 740,000 tonne-per-year smelter, a bauxite mine with an annual capacity of 4 million tonnes and a rolling mill with a capacity of up to 460,000 tonnes.

The smelter and mill are slated to start production in 2013 while the refinery and mine would come online in 2014.

Alcoa stock was down 5 cents at $14.65 in afternoon trading on the New York Stock Exchange.

(Reporting by Steve James; editing by Andre Grenon, Bernard Orr)