Canadian-listed Global Alumina Corp's 3.3 million tonne/year alumina plant in Guinea is on track to open in 2011 and should be approved shortly by the joint venture's development board, a senior director said.
Global Alumina owns 33.3 percent of what it says is the largest ever greenfield alumina refinery project and will be in the cheapest 10 percent of world alumina production.
Guinea is the world's top bauxite exporter with around a third of all known reserves of the aluminium ore.
BHP Billiton , the world's biggest mining croup, owns a 33.3 percent stake, and the remaining third is shared by Dubai Aluminium (Dubal) and Abu Dhabi's state-owned Mubadala Development Company, a diversified holding company.
Chief Financial Officer Michael Cella told Reuters in an interview at the weekend that the project was on track to start producing alumina in September 2011.
Assuming that the joint venture board does come back and ultimately approve the development plan, then the basis of the capital cost estimate that's out in the public (domain) right now and the schedule that's out right now would be affirmed.
Global Alumina raised its cost projections for building the refinery by 35 percent in January, to $4.3 billion dollars, and said the first shipments would not happen until September 2011, two years later than previously expected. The news sent the company's shares to a 9-month intraday low of $1.20.
The shares were down 1 cent at $1.60 in Monday trade.
Cella said the rising costs were behind the company's decision to start negotiations to sell the company.
If the development plan, which I do expect it will be, gets approved shortly ... by the end of the year we would have to raise maybe $200 million, he said.
Asked if he thought a deal to sell the company could be reached before then he replied: I think it is possible, yes.
MOST ALUMINA ALREADY SOLD
Each joint venture partner is guaranteed a share of alumina production equivalent to their share in the project.
Global Alumina has already signed contracts to sell 85-90 percent of its third -- around 40 percent of the share going to partner Dubal for its aluminium smelter in Dubai, Cella said.
Another 35-40 percent was being sold to unlisted commodities trading company Glencore [GLEN.UL], he said.
Bauxite is refined into alumina, then smelted into aluminium metal in a process that uses huge amounts of electricity.
In the 1990s Global Alumina initially looked into the possibility of smelting in Guinea but ruled it out, partly due to the country's limited hydropower potential.
Guinean bauxite is cheaper to mine than most because it lies near the surface, and cheaper to process because of its purity.
But under the rule of authoritarian President Lansana Conte, who seized power in a military coup in 1984, the country is regarded as chronically unstable. An April report by consultancy group McKinsey classed it high-risk.
Government officials have queried other big mining projects like Rio Tinto's $6 billion Simandou iron ore mine, but Cella and Global Alumina President Graham Morrey played down the risk. Company bankers who were visiting Guinea last month when soldiers staged a pay mutiny were not put off, they said.
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