Rio Tinto, CMS scrap plans $2 billion aluminum smelter project

Rio Tinto, CMS to scrap plans of $2 billion aluminum smelter project

3:47 AM, 11th April 2012
Rio Tinto, CMS to scrap plans of $2 billion aluminum smelter project

KUCHING, MALAYSIA: Rio Tinto, the world’s third largest miner, and Cahya Mata Sarawak (CMS) have scrapped plans for a $2 billion aluminum smelter project in Malaysia’s Borneo island of Sarawk as power supply terms could not be finalised. According to CMS, both companies had worked to set up an aluminum smelter for years but could not agree on the commercial power supply terms with Sarawak Energy Berhad.

“As a result, Rio Tinto Aluminum, Malaysia and CMS have agreed that they would cease to pursue plans to jointly develop an aluminum smelter at Samalaju in Sarawak but remain open to other future possible collaborations,” said Richard Curtis, Managing Director, CMS Group. The aluminum smelter was supposed to have an annual capacity of 1.5 million metric tonne to meet surging demand from China and other developing economies.

The project, which was first announced in 2007, had not gone beyond the planning stage due to delays in constructing Bakun dam, one of the world’s largest hydroelectric dams, which would provide cheap power to energy-guzzling smelter. Malaysia’s government last year set a lower rate on the power generated from the Bakun dam in Sarawak, selling it to Sarawak Energy with an expected increase of 1.5 per cent every year.

© Reuters News



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