Rio’s Alcan agrees joint aluminium venture with Saudi Arabia

Rio Tinto is reported to be close to agreeing the terms of a joint venture with Saudi Arabian Mining Co (SAM), for the development of world-class aluminium smelting facility in Saudi Arabia.

The group’s Alcan subsidiary expects to sign an agreement for the $7.5 billion project in August.

The 670,000-tonne-per-year smelter will be financed partly by state-owned miner, Maaden, and an initial public offering of SAM shares this year, in Saudi Arabia.

Alcan will own 49% of the project, which be supplied by a 90-million-tonne bauxite reserve in Az Zabirah, in northern Saudi Arabia.

In terms of proven reserves, Az Zabirah represents 30 years of mining, and Maaden is expecting first production from the smelter by 2012.

Saudi Arabia is keen to attract investment from large aluminium manufacturers.

The country also has substantial reserves of gold, silver, copper, lead and zinc and its government has recently passed a new mining law to allow foreign companies to increase their exploration and production activities