Rio Tinto plans Malaysian aluminium smelter

Rio Tinto Group, the world’s third-largest mining company, has reported that it has been in discussion with a number of companies about the possibility of forming a joint venture to build an aluminum smelter in Malaysia.

Plans for the project are someway to being formalised but Rio has already been in talks with the Malaysian government and the state government of Sarawak, where it is proposing to build the plant.

Aluminum, which is used predominantly in cans, aircraft and cars, has more than doubled in price on the London Metal Exchange since 2002, and a new smelter in Malaysia could provide for China’s growing demand of the lightweight metal.

China is the world’s largest consumer of aluminum and there have been a number of reports in the Malaysian press that Rio will sign an agreement with Cahya Mata Sarawak Bhd. to build a $2 billion smelter to meet this market.

Malaysian sources have also reported that such a smelter would need at least 1,200 megawatts of power, in which case power for a plant at Sarawak could be supplied from the Bakun dam project which should be operational in October 2009.

Enthusiasts for the project believe that construction of a smelter with a capacity of 1.5 million-tons a year could start at Sarawak as early as 2008.