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09. August 2007

Rio Tinto Plans to Build $2 Billion Aluminum Smelter in Malaysia

Rio Tinto Plans to Build US$2 Bln Aluminium Smelter in Malaysia

Anglo-Australian mining giant Rio Tinto Ltd has signed a deal with Malaysian conglomerate Cahya Mata Sarawak Berhad (CMS) to develop a US$2 billion aluminium smelter in Sarawak.

The deal follows Rio's US$38 billion takeover of Canadian aluminium producer Alcan, making it the world's biggest producer of the metal.

The pair will conduct feasibility studies on the design, engineering, construction, commissioning and operation of the smelter.

"The studies will take between 12 to 18 months to complete," Rio Tinto said in a statement today.

"They will examine the technical, environmental, operational, social and economic aspects of a smelter development."

Rio Tinto will take a 60 per cent stake in the smelter, with the remaining holding going to CMS.

The proposed smelter would have an initial production capacity of 550,000 tonnes a year, to be expanded to 1.5 million tonnes.

First production from the smelter could be expected in the fourth quarter of 2010 and it was proposed that electricity for the smelter would come from the Bakun Hydroelectric Dam, which was under construction.

"The smelter would provide approximately 1,200 direct jobs, and up to 3,500 indirect jobs, and the opportunity to build an outstanding technical skill base for Malaysian nationals, while adding billions of US dollars to Malaysia's gross domestic product," Rio Tinto Aluminium chief executive Oscar Groeneveld said.

"This is a very positive development for Rio Tinto and an important step in our plans to develop new greenfield aluminium smelting capacity."

Rio Tinto Aluminium already has four smelters in its portfolio, including Australia's largest, Boyne Smelters Ltd in Queensland, which produces more than half a million tonnes of aluminium each year from its three production lines.

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