Bauxite Resources closer to Chinese plant deal

Sep. 24, 2010 - CHINESE state-owned Yankuang is finalising a deal to build a new alumina refinery in Western Australia with Bauxite Resources.
The deal, which was entered into earlier this year and would be a first for the Chinese giant, has expanded and Bauxite Resources' Chinese partner will now move to complete a bankable feasibility study for the design and construction of a modern refinery in the southwest of Western Australia to process Darling Range bauxite into alumina.
Bauxite Resources has been at the centre of controversy since the first heads of agreement for the refinery was signed, with its project in Bindoon, an hour north of Perth, coming under close scrutiny because trial works started without appropriate approval. Its shares fell heavily because of the community backlash, but the company has since agreed to undertake a public environmental review of the proposed alumina project.
Bauxite Resources chairman and acting chief executive Barry Carbon said the deal signed with its Chinese partners meant the company could now fast track to the "end game".
"The end game is to build a refinery, which can take Darling Range bauxite and turn it into a secondary processed alumina," he said.
Yankuang will fund 91 per cent of the refinery's construction costs in return for 70 per cent of the alumina product produced.
Yankuang Corporation owns 88 per cent of Yanzhou Coal, which bought Australia's Felix Resources, but the deal with Bauxite Resources would be the first refinery it has built outside China.
"The Chinese company have a big smelter operation but they do not have their own supply of alumina," Mr Carbon said.
"We have been looking for an appropriate way to monetise our bauxite and they had been looking for a way to give them some security of resources".
Construction on the refinery, which could cost more than $1 billion, is expected to start in five years, subject to a bankable feasibility study, site selection, and environmental and regulatory approvals.
Mr Carbon said the studies would centre on constructing a world-best practice refinery, focusing on high environmental standards.
"All the Australian refineries in concept terms are about 40 to 50 years old, before there was environmental awareness," he said.
"The world has moved along since then, so we think our timing is great. There has not been a significant quantum step towards a modern refinery in Australia".