Sept 16 (Reuters) - Saudi Arabian Mining Company

(Ma'aden) said on Monday it has signed a non-binding

agreement with Aluminium Bahrain B.S.C. (Alba) to pursue a

potential business combination to create a global aluminium

powerhouse.

Ma'aden agreed to buy shares in Alba in exchange for the

entire share capital of two of its subsidiaries - Ma'aden

Aluminium and Ma'aden Bauxite and Alumina - which were part of a

joint venture with Alcoa ( AA ).

A day before this agreement, the U.S.-based aluminium maker

Alcoa ( AA ) sold its 25.1% stake in the joint venture to Ma'aden for

about $1.1 billion in a cash-and-stock deal.

"This combination will allow both companies to scale up

production, extend our global presence and explore new

opportunities in clean energy," said HE Khalid Al Rumaihi,

Alba's chairman of the board.

Ma'aden did not disclose the financial terms of the

non-binding agreement and added that, as part of the due

diligence process, the companies would discuss Alba being listed

on the Saudi Exchange.