Rio Tinto in Malaysian venture to build aluminum smelter

Global miner Rio Tinto Ltd. and local conglomerate Cahya Mata Sarawak signed a pact yesterday to jointly build an aluminum smelter that could cost up to $2 billion in Malaysia's eastern state of Sarawak The smelter, which will use power from the Bakun hydroelectric dam under construction on Borneo island, is expected to be the fifth and biggest aluminum plant for Rio Tinto, said its external affairs manager Jim Singer The project is expected to be the main energy consumer for the 2,400-megawatt controversial Bakun dam, which is due to be completed by 2010 after years of delay Environmentalists and advocates of Borneo's indigenous people have protested against the dam project because it would flood an area the size of Singapore and displace thousands of people Production from the Sarawak smelting plant will begin in the fourth quarter of 2010 with an initial annual output of 550,000 metric tons, rising to 1.5 million tons over time, the two companies said in a statement Rio Tinto will hold a 60 percent stake in the venture to be known as Sarawak Aluminium Company. The remaining 40 percent will be owned by Cahya Mata, in which the family of Sarawak Chief Minister Abdul Taib Mahmud is a key shareholder