KUCHING: The proposed US$2bil (RM6.9bil) aluminium smelter to be built by the Cahya Mata Sarawak Bhd (CMSB)-Rio Tinto Aluminium joint venture in Bintulu is expected to come on stream in late 2010.
It would have an initial production capacity of 550,000 tonnes a year, and the capability to expand to 1.5 million tonnes per annum later, Rio Tinto chief executive Oscar Groeneveld told reporters.
The smelter would, in its first stage operation, require 900MW of electricity, which would be sourced from the 2,400MW Bakun hydroelectric dam project now under construction.
“We have to start negotiations soon on the purchase price of the Bakun power,” Groeneveld said after the signing of a heads of agreement between Rio Tinto and CMSB here yesterday.
Rio Tinto was represented by managing director (smelting) Sandeep Biswas and general manager (smelter project development) Matt Liddy while group managing director Datuk Richard Curtis and deputy group managing director Syed Ahmad Alsree Alwee signed on behalf of CMSB.
Sarawak Chief Minister Tan Sri Abdul Taib Mahmud and Australian High Commissioner to Malaysia Penny Williams witnessed the ceremony.
Rio Tinto and CMSB will have 60:40 equity interest in the joint venture, Sarawak Aluminium Co (Salco).
Curtis said CMSB would be raising long-term funding locally and in the international capital market to finance its investment in the project.
Salco will carry out detailed feasibility studies on the design, engineering, construction, commissioning and operation of the smelter project.
The studies, which will take between 12 and 18 months, will examine the technical, environmental, operational, social and economic aspects of the project, to be sited in Similajau, 80km from Bintulu.
Earlier, Groeneveld cited an independent study which said the project had the potential to generate RM3bil a year to Malaysia’s gross domestic product at current prices for the metal.
“On a per capita basis, consumption of aluminium in Asia is currently low but growing rapidly. A smelter in Malaysia is well poised to take advantage of this growth.”
Groeneveld said the raw materials for the proposed smelter would be imported from Rio Tinto's refinery in Queensland, Australia.