Malaysia says BHP, Rio and Alcoa mulling smelter project

Malaysia says BHP, Rio and Alcoa mulling smelter project

Agence France-Presse, Kuching

Global metals giants BHP Biliton, Alcoa Inc and Rio Tinto, are
keen on building an aluminium smelter in Malaysia's eastern
Sarawak state on Borneo island, a minister said on Thursday.

Firms in China have also expressed interest, Sarawak chief
minister Taib Mahmud told reporters on the sidelines of an
environmental conference here.

However, Taib said no decision had been made on which company
would be involved in the planned smelter, which would draw power
from the state's controversial Bakun dam.

"The government of Malaysia has not decided which aluminium
plant is going to be linked with the Bakun dam project because of
the negotiation of prices of electricity," he said.

Taib dismissed earlier reports that the Sarawak government was
supporting any one company.

"We don't back people, otherwise there is no opportunity for
choice," he said.

When asked if the Sarawak government would take a stake in the
aluminium smelter, Taib sidestepped the question, insisting the
market for production of electricity were among key issues that
needed to be worked out first.

"We are flexible," he said of the possibility of Sarawak
taking a stake.

He also confirmed the Bakun dam would have a production
capacity of 2,400 megawatts, following reports the government was
mulling measures to downsize the project.

Several companies have announced they were building smelters
in Sarawak.

BHP Billiton and Japanese conglomerate Mitsubishi Corp in
October issued a statement saying they would jointly build an
alumimium smelter in Sarawak.

Malaysia's Smelter Asia recently said it has signed a deal
with China Aluminium International Engineering Corp (Chalieco) to
use its technology at a planned aluminum plant in Sarawak, which
would produce 600,000 metric tons of aluminium a year.

It said Smelter Asia was expected to buy some 1,100 megawatts
of electricity generated by the Bakun dam.

The Bakun dam project has been dogged with delays and setbacks
since its approval in 1993. It had been slated to be completed by
August 2007.

Initiated by former premier Mahathir Mohamad, the dam was
taken over by the government and revived in 2001 after it was
shelved during the 1997-1998 Asian financial crisis when the main
operator fell into debt.

The dam, which involves flooding an area the size of
Singapore, has attracted fierce criticism because of its harmful
impact on the environment.