US$2b smelter plan in M'sia

US$2b smelter plan in M'sia


KUALA LUMPUR


31-Jul-07

MALAYSIAN financial and construction conglomerate Cahya Mata Sarawak is close to
signing a deal with global miner Rio Tinto to build a US$2 billion aluminium
smelting plant, a company spokesperson said.

The plant, with an annual capacity of 1.5 million tonnes, will be located in the
east Malaysian state of Sarawak on the island of Borneo.

"Yes, it is correct that we are working with Rio Tinto," the spokesperson said
yersterday. "We are still in discussion."

Asked if the deal could be signed as early as next week, she added, "It's a bit
early", but gave no further details.

The Malaysian Reserve newspaper had earlier reported the two firms could sign an
agreement by the first week of August for the construction of the mammoth
smelter project, which is scheduled to start next year and be completed by 2010.

The project needs at least 1,200 MW of power, the paper said, adding that Rio
Tinto was still in the finalising stage of sourcing power for the project.

Rio Tinto officials declined to comment on the news, but said the firm had been
in talks with Malaysian authorities.

"Rio Tinto has been in discussions with the state and federal governments and
I'm not at liberty to say where those discussions are at," a company spokesman
told Reuters.

Although the project has been mooted for many years, it has never left the
Malaysian government's drawing board because of delays to the huge
hydro-electricity scheme which would power it.

The 2,400 megawatt Bakun hydro-electric dam is now three-quarters complete and
is due to be finished in 2010.

In May, Oscar Groeneveld, chief executive of Rio Tinto Aluminium, said the firm
was a serious contender for the smelter project in Sarawak state. Demand for
aluminium has been surging, driven largely by China and other developing
economies.

Though prices are off their historic highs of 2006, new aluminium smelters are
sprouting around the world and existing smelters are being expanded. Reuters

.

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