SYDNEY, March 23 (Reuters) - Australia said on Friday that Chinese aluminium group Chalco has agreed to develop the vast Aurukun bauxite deposit in eastern Australia forfeited by its rival, Alcan Inc., as part of an aluminium-making project costing around A$3 billion ($2.4 billion).
Australia's Queensland state last year picked Chalco -- Aluminum Corp. of China Ltd. -- from a field of 10 to submit a final proposal to develop the deposit in eastern Australia.
"This is a multi-billion dollar milestone in the relationship between Queensland and China, Acting Queensland Premier Anna Bligh said in a statement."
Geologists estimate that the bauxite reserve ranges in size from 500 million to 650 million tonnes. It takes about four tonnes of bauxite to make two tonnes of alumina. Two tonnes of alumina is used to produce a tonne of aluminium.
Chalco had been tipped as the main contender to develop the project after Rio Tinto Ltd. and Alcoa Inc. both pulled out.
Swiss-based Xstrata Plc. and Brazil's CVRD also showed interest in a development plan at one point.
An early blueprint called for 3,800 construction jobs over three years, including 700 for the mine and washing plant at Aurukun and 3,100 for the refinery. It would also require a permanent workforce of about 600.
The plan was to extract 7.5 million tonnes of bauxite every year from the lode.
Queensland's government took final applications more than a year ago after taking the deposit off Alcan in 2004 for failing to meet a development deadline set by France's Pechiney. Alcan has since acquired Pechiney.
Aurukun is a predominantly aboriginal community of about 1,000 people in the remote area of Cape York, near similar deposits mined by Rio Tinto.
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