Rio Tinto and Cahya Mata Sarawak sign HOA for smelter

Rio Tinto and Malaysian conglomerate Cahya Mata Sarawak Berhad (CMS) have signed a Heads of Agreement for the proposed development of a world-class aluminium smelter in the State of Sarawak. Under the conditions of the Heads of Agreement, detailed feasibility studies on the design, engineering, construction, commissioning and operation of an aluminium smelter are due to commence shortly, with the studies expected to take between 12 and 18 months to complete. The studies will examine the technical, environmental, operational, social and economic aspects of a smelter development. The initial participating interests in the project will be 60 percent Rio Tinto Aluminium and 40 percent CMS, with the smelter to be known as Sarawak Aluminium Company (SALCO). The proposed smelter, to be located in Similajau, 60km from Bintulu town, would have an initial production capacity of 550,000 tonnes per year, with the capability to be expanded to 1.5 million tonnes. First production from the smelter could be expected in the fourth quarter of 2010. It is proposed that electricity for the smelter will come from the Bakun Hydroelectric Dam, which is currently under construction. Rio Tinto Aluminium Chief Executive, Oscar Groeneveld said this was a very positive development for Rio Tinto and an important step in the company’s plans to develop new greenfield aluminium smelting capacity. “We look forward to working with the Malaysian Federal Government and Sarawak State Government, and CMS on this project, which has the potential to generate significant social and economic benefits for Malaysia and local communities in Sarawak,” Mr Groeneveld said. “CMS and Rio Tinto Aluminium are committed to develop the project to world-class environmental and community standards,” he said. Once developed the project will represent one of the largest direct foreign investments in Malaysia, provide significant ongoing employment, boost small business in the region, and will foster the development of support industries. CMS Group Chairman, Tan Sri Syed Anwar Jamalullail CMS Group’s resources, capabilities and experience in Sarawak’s infrastructure development sector would complement the technical and management skills of Rio Tinto.