Rio Tinto's Paraguay investment may reach $2.5 bln

ASUNCION, Dec 14 (Reuters) - Rio Tinto Alcan, a unit of global mining giant Rio Tinto , said on Monday it could invest up to $2.5 billion in a potential aluminum smelter in Paraguay. On Monday, Rio Tinto Alcan said it had begun negotiations on a possible power purchase agreement for the potential smelter. "Our projections indicate the total investment ... to be approximately $2.5 billion," Sandeep Biswas, the head of Rio Tinto Alcan's new business division, told reporters in Asuncion. The company signed a letter of intent with Paraguay's state-run National Electrical Administration (ANDE) to begin negotiations on an energy purchasing agreement in the future. Sixto Amarilla, the head of ANDE, told Reuters the plant could be operating by 2016 if the there are no changes to a timetable agreed on Monday. (Reporting by Mariel Cristaldo, Writing by Kevin Gray; Editing by Lisa Shumaker)