KUALA LUMPUR, Malaysia (AP) - Global miner Rio Tinto Ltd. and local conglomerate Cahya Mata Sarawak signed a pact Tuesday to jointly build an aluminum smelter that could cost up to $2 billion (1.45 billion euros) in Malaysia's eastern state of Sarawak.
The smelter, which will use power from the Bakun hydroelectric dam under construction on Borneo island, is expected to be the fifth and largest aluminum plant for Rio Tinto, said Jim Singer, its external affairs manager.
The project is expected to be the main energy consumer for the 2,400-megawatt Bakun dam, due to be completed by 2010 after years of delay.
Environmentalists and advocates of Borneo's indigenous people have protested against the dam project because it would flood an area the size of Singapore and displace thousands of people.
Production from the Sarawak smelting plant will begin in the fourth quarter of 2010 with an initial annual output of 550,000 metric tons, rising to 1.5 million tons over time, the two companies said in a statement.
The companies said in the joint statement that the project will mark one of the largest foreign investment in Malaysia, adding billions of U.S. dollars to the economy and providing up to 4,700 direct and indirect jobs.
Rio Tinto, based in London and Melbourne, already owns and operates four smelters. Last month, it made a $38.1 billion (30 billion euros) bid for Canada's Alcoa Inc. in a takeover that will form the world's largest aluminum producer.
Cahya Mata is Sarawak's largest infrastructure company with interest in construction, road maintenance, cement manufacturing and quarrying.
