TORONTO (CP) - Global Alumina Corp. (TSX:GLA.U), facing a cash crunch, says it's in exclusive talks to form a joint venture with global resources giant BHP Billiton and Middle Eastern partners to develop the company's planned US$2.2 billion alumina refinery in West Africa.
The Canadian-listed mine developer said Sunday the potential joint venture also includes the company's current strategic partner, Dubai Aluminium Co. Ltd., as well as Mubadala Development Co., an investment firm based in Abu Dhabi.
Under terms of the agreement Sunday, the three partners have until March 31 to negotiate a definitive transaction to acquire shares in Global Aumina's wholly owned subsidiary Guinea Alumina Corp. Ltd.
Global Alumina would keep a one-third interest in the Guinea project and BHP Billiton, Dubai Aluminium and Mubadala would acquire one-third, one-quarter and one-twelfth stakes, respectively.
The transaction announced Sunday is a major step forward for Global Alumina's plans to build a big alumina refinery in Guinea, a west African country which holds about 30 per cent of the world's reserves of bauxite, the mineral processed into alumina powder.
Alumina is then smelted into aluminum, a key lightweight industrial metal increasingly used in packaging, construction and housing materials, auto parts and aircraft manufacturing.
Global Alumina was thrown into a financial bind in late spring when Emirates International Investment Co. LLC scrapped plans to go ahead with a second part of a US$100 million subscription financing agreed to last year.
In a related matter Sunday, Global Alumina said the partners have agreed to provide interim financing of $100 million in an expedited loan for project development costs until the definitive joint venture deal is finalized.
However, "there can be no assurance the negotiations with respect to the proposed joint venture and associated agreements will be successfully completed or that the company or its affiliates will fulfill the various conditions precedent to borrowings under the loan facility agreement," the mine developer cautioned.
Global Alumina has its legal head office in Saint John, N.B. and its shares are listed on the Toronto Stock Exchange, where they trade in U.S. currency. But the company's executives are based in New York City and its main operations are in Guinea.
BHP Billiton, an Australian-British resrouces company with 38,000 employees, is the world's sixth largest producer of primary aluminium, with a total operating capacity of more than one million tonnes of aluminium, about 14 million tonnes of bauxite and four million tonnes of alumina.
The company also produces copper, oil and gas and other metals and operates Canada's first diamond project, the Ekati mine in the Northwest Territories.
Dubai Aluminium, wholly owned by the Dubai government, owns one of the largest aluminum smelters in the western world and struck a 2005 deal with Global Alumina to buy 40 per cent of the expected annual production from the proposed Guinea refinery.
Mubadala Development is the main investment company of the Abu Dhabi government and invests in energy, utilities, health, real estate, public-private partnerships, basic industries and services.
"Due to the failure by Emirates International to purchase from the company a $50 million principal amount convertible debenture, the company is experiencing liquidity issues," Global Aluminum said.
"The expedited closing of the loan agreement and the initial advance thereunder will allow the company to continue development of the project during the negotiation of the proposed joint venture documents."
Guinea's national assembly approved the alumina project last year, with full production expected by the end of 2009.
The refinery would be initially designed to process more than eight million tonnes of bauxite a year and convert that into up to three million tonnes of alumin
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