Aluminum Corp of China and London- listed miner Aricom have agreed to build a 2.2 billion yuan (HK$2.24 billion) titanium sponge plant in northern China, sources involved in the deal said Thursday.
The plant will be able to produce 30,000 tonnes a year of titanium sponge - used to make titanium for airplanes and golf clubs. It will be built in two stages and construction will begin within 12 months.
State-controlled Aluminum Corp of China, or Chinalco, said the plant would be built in Jiamusi, a city in northern Heilongjiang province. An agreement was signed May 15 by the two companies and the city government.
Aricom chief executive Jay Hambro said a feasibility study would be published within the next week, giving details of when the project would start production. He did not confirm the investment cost.
"This is a framework agreement setting out the basis on which we will proceed," he said.
Aricom will start mining iron and titanium ore in Russia's Far East in the fourth quarter of 2007.
Its Kuranakh project will ship 290,000 tonnes a year of ilmenite, the ore from which titanium sponge or dioxide - a pigment providing brightness in paint and sunscreen - is made.
Titanium sponge has quadrupled in value in the last three years on a wider commodities boom and increased demand for titanium metal. World output of sponge is forecast to grow to 180,000 tonnes in the next four years.
Chinalco is China's largest aluminum producer and the parent company of listed Chalco (2600), the world No2 alumina producer.
Kuranakh, in Amur region, will also produce 900,000 tonnes a year of titano- magnetite ore, containing an average 62 percent iron, for shipment to China. China produced a third of world steel output last year.
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