Giant Norwegian aluminium producer Hydro could invest up to $4 billion in a proposed alumina plant with state miner PT Aneka Tambang in Tayan, West Kalimantan, if Russia’s United Company Rusal decides to pull out of an earlier partnership agreement, a senior government official said on Wednesday.
“Hydro has been talking to Antam about a preliminary study on Tayan,” said Muhammad Lutfi, chairman of the Investment Coordinating Board (BKPM).
Rusal, the world’s biggest aluminium producer, signed a preliminary agreement involving the project with the state miner, also known as Antam, in 2007. It is due expire at the end of the year. However, prices of aluminium plunged 36 percent in London last year as the global recession hit demand, according to Bloomberg data.
Lutfi said Hydro was considering an alumina plant with a capacity of 1.5 million tons, adding that a definitive decision by Rusal would likely be announced at the end of the month.
“I have asked Rusal to present their timeline should they decide to sell their interest in the Tayan project,” he said.
He said Rusal now apparently saw the Tayan project as superfluous to its long-term business plan. The plant was originally expected to process 3.6 million wet metric tons of bauxite annually into 1.2 million tons of smelter-grade alumina.
Antam president director Alwin Syah Loebis said the firm had not made a final decision on who it would partner with on the Tayan project.
“Rusal has not officially declared its withdrawal,” he said. “We have met with Hydro, but we won’t be able to make any decision until we settle the issue with Rusal.”
Rusal, which would hold a 51 percent stake in the project, initially estimated that it would cost between $1.2 billion and $1.5 billion.
Hydro, originally part of Norsk Hydro, was established to take over its parent’s aluminium operations after Norsk Hydro merged with Norway’s state oil company, Statoil, to form StatoilHydro.
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