Rio Tinto, the London-based mining group, is talking to the Libyan Government about becoming the largest Western investor in the country run by Colonel Gaddafi.
The company is evaluating the feasibility of building a $2.5 billion (£1.3 billion) aluminium smelter in Libya that would be capable of producing more than 360,000 tonnes of metal a year.
Libya has large reserves of natural gas that it wants to exploit and it could use this energy supply to power a smelter.
The United States and Europe lifted sanctions against Libya in 2004 after the country agreed to pay restitution for its part in terrorist acts during the 1980s, including the bombing of a PanAm flight over Lockerbie in 1988.
BP will invest about $900 million exploring the Libyan coast for oil and gas opportunities and Royal Dutch Shell will spend up to $450 million to upgrade an existing liquid natural gas refinery.
Tom Albanese, the chief executive of Rio Tinto, said: “We see the conversion of gas into aluminium as one way they could diversify their economy.”
Aluminium smelting is one of the most energy-intensive industrial activities in the world and can only be done economically if there is a guaranteed, low-cost energy source nearby.
Rio Tinto bought Alcan, the Canadian producer, last year for $38 billion to gain access to Alcan's hydro-electric powered smelters in Quebec and also for its industry-leading technology.
The company is in negotiations with a number of Middle Eastern countries to establish gas-powered smelters using the region's vast energy reserves. Its Sohar smelter in Oman began producing metal for the first time yesterday and this facility is being used as the blueprint for other developments in the Middle East.
Source: Times Online
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