MAC: Mines and Communities

London Calling sees Rio Tinto take it on the Chinalco

Published by MAC on 2011-05-10
Source: Reuters (2011-05-02)

China's firm joins British giant in Bakun Dam

As reported last week, Vale of Brazil has just secured a big chunk of one of the world's most-criticised new hydro dams. See: Vale intends taking share in Belo Monte dam, Brazil

Now, China's biggest aluminium producer, Chinalco, has signed a JV deal with a Malaysian tycoon in order to access electricity from another hugely-condemned dam - Bakun in Sarawak, due to start up this year.

Not that this is surprising - damnable though it may be, given the legacy of forest destruction and violation of Indigenous Peoples rights bequeathed by this enterprise over recent years.

Chinalco is the biggest shareholder (at around 9%) in Rio Tinto.

And, more than three years ago, Rio Tinto signed a memorandum of understanding with the Malaysian government to take power from Bakun for a proposed aluminium smelting complex of its own. See: London Calling on a damnable deal

In early April Chinalco chairman Xiong Weiping told the Financial Times (3 April 2011) that he viewed Rio Tinto as "a key strategic partner" in the conglomerate's struggles to branch out from its existing business, and expand overseas into "high-grade copper, bauxite, iron ore and coal resources".

"‘We can't go out to fight alone,' said Xiong: "With Rio being one of the top mining companies in the world, Chinalco can learn a lot from them, including in operational management, asset operation and risk management".

Less than a fortnight later, the Rio Tinto - Chinalco iron joint venture in Guinea was waved ahead by the government.

Then, barely within the week, the Chinese conglomerate was announcing another deal with the UK giant, to explore for copper in Chile.

By mid-2009, Rio Tinto had its back truly against the Chinese wall.

Four of its senior staff had been arrested on charges of bribery and corrupt practices in Beijing (they were later jailed).

And Rio Tinto was forced to cancel an earlier agreement with Chinalco, under which the latter would have doubled its stake in the London-listed outfit.

That must all seem a long, long while ago. To coin a well-worn English idiom, Chinalco and Rio are now "as thick as thieves".

[London Calling is published by Nostromo Research. Reproduction is welcomed, with full acknowledgment to source].

Chinalco signs on to $1.6bn Malaysian smelter JV

Reuters

2 May 2011

KUALA LUMPUR - Aluminium Corporation of China (Chinalco) has signed a joint venture with a company jointly owned by Malaysian tycoon Syed Mokhtar Al Bukhary to build a $1.6 billion smelter in the country's Borneo state of Sarawak.

The joint venture for the 370,000 tonnes a year aluminium smelter follows from the heads of agreement signed between Syed Mokhtar's Gulf International Investment Group (GIIG) Holdings and Chinalco in 2010, said project manager Asia Smelter.

The smelter is among various projects including Rio Tinto's aluminium processor and OM Holdings's manganese plant that were waiting to begin construction once the 2,400 megawatt Bakun hydro-electric dam starts up this year.

Asia Smelter said it also signed the principal terms of the power purchase agreement with Sarawak Energy for over 600 MW of power from the grid powered by Bakun dam and other hydro-electric power plants.

"On further availability of power from the grid, the plant capacity is planned to be increased up to 700,000 metric tonnes," Asia Smelter said in a statement issued late on Friday.

Construction of the smelter in the Southeast Asian country will start in second half of next year with completion slated for the first half of 2015.

"The plant will... also support the region's development thrust by providing aluminium, which is critical in driving the massive infrastructure projects that are being planned," Mohamed Alabbar, co-owner of GIIG Holdings and a prominent United Arab Emirates businessman, said in the statement. (Reporting by Niluksi Koswanage)


Rio signs another JV with Chinalco

By David Fickling

Dow Jones Newswires

27 April 2011

RIO Tinto will enter a joint venture with Chinalco's Australian subsidiary to explore for copper in Chile.

China Yunnan Copper Australia's (CYU) main shareholder is Yunnnan Copper Industry, which is in turn majority-owned by Chinalco. Chinalco is also the largest shareholder in Rio Tinto, holding around 9 per cent of its UK-listed shares.

CYU said today it would explore Palmani and Caramasa, two tenements close to BHP Billiton's Cerro Colorado mine with good prospects for porphyry, a copper ore which often contains significant quantities of gold, silver and molybdenum. The company could earn a 40 per cent interest in each project if it spends a minimum of $US18 million over five years on the two projects.

Last December, Rio Tinto and Chinalco announced a joint venture to carry out exploration activities in China, although the companies haven't said which commodities they would be looking for.

The companies' largest joint venture, the Simandou iron ore project in the west African country of Guinea, saw progress last week when Rio Tinto signed a deal with Guinea's government that will allow Guinea to raise its eventual stake in the project to 35 per cent.

Chinalco has agreed to pay $US1.35 billion to Rio Tinto to take a 44.65 per cent stake in the project, which is currently 95 per cent owned by Rio Tinto and 5 per cent by the World Bank's International Finance Corp. That stake would diminish as Guinea's ownership of Simandou rises.

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