Rio Tinto Holds Talks on Malaysia Aluminum Venture

Rio Tinto Group, the world's third- largest mining company, said it talked with a number of parties about a possible partnership for an aluminum smelter to be built in Malaysia. Rio hasn't decided whether to go ahead with the project and wouldn't identify the potential partners, spokesman Nick Cobban said today in a telephone interview from London, where the company is based. It also talked to the Malaysian government and the state government of Sarawak, where the plant would be built. "We've a great belief in the aluminum industry in the medium to long term," Cobban said. He added that a smelter in Malaysia would benefit from demand in China, the world's largest consumer of the lightweight metal. Aluminum, used in beverage cans, aircraft and cars, has more than doubled in price over the past five years on the London Metal Exchange. Cobban declined to comment on a report today from the Malaysian Reserve, a business newspaper, that Rio will sign an agreement with Malaysia's Cahya Mata Sarawak Bhd. in August to build a $2 billion smelter. Kuching, Sarawak-based Cahya Mata corporate communications manager Eda Ahmad didn't answer a call to her mobile phone and didn't respond to an e-mailed request for comment. Shares of Cahya Mata gained 11 percent today to close at 2.97 ringgit, the highest since October 2000, valuing the company at 978.45 million ringgit ($282.3 million). The company and its partners including China's Luneng Group Co. submitted a bid to the government to build the smelter, it said Dec. 23. Construction Date Rio gained 113 pence, or 3.4 pence, to close at 3,451 pence in London. The stock dropped 12 percent last week. Construction of the smelter will start next year and be completed in 2010, the Malaysian newspaper said, citing people it didn't identify. The agreement may be signed by the first week of August, the newspaper said. Smelter Asia Sdn., controlled by Malaysian businessman Syed Mokhtar Al-Bukhary, started talks last month to become part of the Cahya-Rio venture, the Reserve said. The 1.5 million-ton-a- year smelter in Sarawak will need at least 1,200 megawatts of power, the newspaper said. Power supply would come from the Bakun dam, Cobban said. Bakun will have an installed capacity of 2,400 megawatts and the power plant will start operations in October 2009, the Bernama news agency reported March 28.