Hydro is entering into a joint venture with the Australian mining company United Minerals Corporation (UMC) with the intention of recovering bauxite and producing alumina in Kimberley, Western Australia.
The agreement, which was signed in Oslo this week, gives Hydro a 75 percent share in the partnership. The agreement is an extension of the exploration and trial drilling cooperation entered into on May 14 of this year. The progress since then has been positive, though further drilling and testing are necessary in order to determine the volume and quality of the deposits.
In the first phase of the new agreement, the obligation will be to finish the ongoing investigations that are planned for completion by the end of 2009 within a total cost framework of NOK 40 million. Hydro has undertaken to cover a relatively large share of the preliminary investigation costs.
The new agreement gives Hydro an ownership stake in the exploration rights and outlines the framework for the subsequent stages of a possible project. If commercially recoverable deposits can be confirmed, consideration will be given to setting up a mining company and an alumina refinery, which may then result in an investment decision.
A possible bauxite and alumina project in Australia is in line with Hydro’s strategy to increase the company's primary aluminium production and step up its production of alumina, the most important raw material for the production of aluminium.
The agreement was signed in Oslo this week by the heads of the two companies, CEO Matthew Hogan of UMC and Hydro CEO Eivind Reiten.