Anglo-Australian mining giant Rio Tinto and a Malaysian firm are to undertake a joint study to build what could be one of the world's biggest aluminum smelters, a source said yesterday.
Under an agreement expected to be signed on Tuesday, Rio Tinto Aluminium and Cahaya Mata Sarawak Bhd would carry out the study for a US$2 billion smelter in Similajau, Sarawak.
The smelter was expected to begin production in 2010, said an industry source familiar with the plan.
"If the project takes off, it has the potential to be one of the biggest aluminum smelters in the world," the source said.
Power from the controversial Bakun dam in Sarawak on Borneo island was expected to supply the bulk of energy needs for the smelter, the source said.
The dam, which involves flooding an area the size of Singapore, has attracted fierce criticism because of its harmful impact on the environment and the fact that 10,000 residents have already had to evacuate the project site.
Sarawak chief minister Abdul Taib Mahmud last month said the state's economy would be fuelled by power-hungry industries ranging from alumimium smelting to biodiesel production by 2020.
As part of the Rio Tinto Group, Rio Tinto Aluminium owns and manages mining, refining and smelting assets mainly situated in Australia and New Zealand.