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Rio Tinto investing $1.8 billion to expand Yarwun Alumina capacity to 3.4 million tonnes

Mumbai: Anglo-Australian mining giant Rio Tinto will invest $1.8 billion for expanding capacity of its Yarwun alumina refinery in Gladstone, Queensland by another 2 million tonnes. The expansion would more than double annual production at the smelter from the current 1.4 million tonnes to 3.4 million tonnes by 2011.

Rio Tinto's long life resource at Weipa in northern Queensland will supply bauxite to the refinery. The Yarwun expansion will have the benefit of substantial scale efficiencies gained from the construction of the first stage of the refinery.

"The expansion of the Yarwun Alumina Refinery is one of the most significant investments made by Rio Tinto in recent years. The attractive fundamentals of the aluminium industry, combined with Yarwun's well located, low cost position and our excellent bauxite resource at Weipa, reinforce the deep underlying strength of the group's organic growth pipeline," said Tom Albanese, chief executive of Rio Tinto.

"This project firmly positions Rio Tinto in the first quartile of the alumina cost curve and creates the future supply for the growth in the world traded alumina market. The expansion further strengthens our aluminium infrastructure in Gladstone and Queensland . We have received a high level of encouragement from federal, state and local governments as well as community support," said Oscar Groeneveld, chief executive of Rio Tinto Aluminium.

"One important feature of the project is the inclusion of a gas-fired cogeneration facility. Gas will become the refinery's primary fuel source, demonstrating our ongoing commitment to reducing greenhouse gas emissions and improving energy efficiency," he said.

Rio Tinto said work on its expansion at the alumina refinery will start in the third quarter of 2007 and is expected to take about three years to complete. First shipments from expanded capacity are expected in the second half of 2010, it said.

Rio had previously placed its expansion plans at Yarwun on hold, citing cost pressures, and the decision to go ahead with the project may damp persistent speculation the miner is mulling a bid for Canadian aluminum giant Alcan Inc., reports quoting analysts said.

Rio Tinto and rival BHP Billiton Ltd. have both been at the center of speculation over a possible buyout of Alcan although the to have so far preferred to focus on their own expansion projects.

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