Rio's Alcan plans $2.8bn smelter in Paraguay

RIO Tinto plans to build a $US2.5 billion ($2.8bn) aluminium smelter in Paraguay and hopes to start operations in 2016. This week, Rio's Alcan unit said it had begun negotiations with Paraguay's national electricity company to source power for the project. No details were given on the size of the smelter, but Alcan business development vice-president Sandeep Biswas told Reuters the project would cost about $US2.5bn. Under a timetable agreed to with the government, the smelter is aiming for first production in 2016. Separately, Rio has struck its first sizeable mining contract in the Pilbara region of Western Australia in a move designed to give native titleholders a bigger stake in the Western Turner Syncline deposit. Rio has awarded a $200 million contract to build, mine and transport iron ore from the deposit to a joint venture between the Eastern Guruma people and listed mining contractor NRW Holdings. The four-year contract will boost Eastern Guruma's equity in the joint venture from 25 per cent to 35 per cent as the group builds more ability in mining services. Mandated Aboriginal employment levels will rise each year, giving an average of 27 per cent during the life of the contract. The contract also includes $6m for training the Eastern Guruma with a view to the joint venture operating other Pilbara mines. Unlike BHP Billiton, Rio has been an owner-operator of its Pilbara mines, rather than using contractors. A spokesman said there was no change to this strategy. Rio iron ore chief Sam Walsh said the joint venture would allow the Aboriginal owners of the land to develop mining services skills. "It adds to the wealth of knowledge and experience we need to establish among indigenous businesses in the Pilbara to ensure sustainable operations for years to come," Mr Walsh said.