Rio Tinto eyes two-billion-dollar smelting plant in Malaysia

KUALA LUMPUR: Anglo-Australian mining giant Rio Tinto and a Malaysian firm are to undertake a joint study to build what could be one of the world's biggest aluminium smelters, a source said Sunday. Under an agreement expected to be signed Tuesday, Rio Tinto Aluminium and Cahaya Mata Sarawak Bhd. would carry out the study for a two-billion-dollar smelter in Similajau, Sarawak. The smelter was expected to begin production in 2010, an industry source familiar with the plan told AFP. "If the project takes off, it has the potential to be one of the biggest aluminium smelters in the world," the source said. Power from the controversial Bakun dam in Sarawak on Borneo island was expected to supply the bulk of energy needs for the smelter, the source said. The dam, which involves flooding an area the size of Singapore, has attracted fierce criticism because of its harmful impact on the environment and the fact that 10,000 residents have already had to evacuate the project site. Sarawak chief minister Abdul Taib Mahmud last month said the state's economy would be fuelled by power-hungry industries ranging from aluminium smelting to biodiesel production by 2020. As part of the Rio Tinto Group, Rio Tinto Aluminium owns and manages mining, refining and smelting assets mainly situated in Australia and New Zealand. Rio Tinto said last week its first-half net profit fell 14 per cent from a year earlier to 3.25 billion US dollars due to industry-wide cost pressures. The group is set to become the world's largest aluminium producer through its 38.1-billion-dollar takeover of Canada's Alcan Inc.