UPDATE 1-China alumina producers eye Indonesia for supply

* Major Chinese alumina producers eyeing Indonesia projects

* Top alumina producers Chalco, Bosai and Weiqiao eyeing supplies

* Indonesia bauxite, alumina exports fall after export tax (Updates with analyst, Indonesian industry comment)

By Polly Yam

HONG KONG, Aug 8 (Reuters) - Three of China's biggest alumina producers are planning to invest at least $1 billion into bauxite mines and refineries in Indonesia to guarantee supplies of the aluminium raw materials under threat from new export taxes and a 2014 export ban.

The plans are among the first signs that Jakarta's rules curbing raw ore exports are driving major investment in metal processing in mineral rich Indonesia.

Sources at top alumina producer Aluminum Corp of China Ltd (Chalco) , Bosai Minerals Group Co Ltd and Shandong Weiqiao Pioneering Group said their companies were actively seeking ways to increase supplies.

Bosai Minerals was planning to boost production at its mines in South America and Africa, while Chalco was trying to quickly obtain a mining permit in Laos, the sources said.

China is the world's largest consumer and producer of aluminium, accounting for about 40 percent of the global market. It used to be the world's leading alumina importer until last year, when local refiners boosted production.

Indonesia supplied about 80 percent of the 25.42 million tonnes of bauxite China imported in the first half of the year, but exports fell sharply in June after the Indonesian government imposed a 20 percent export tax on minerals in May.

"For China, if they can work alongside Indonesia, they can guarantee mineral supply," said Arief Budiman, an analyst at Jakarta-based investment firm Sucorinvest.

Indonesia is now requiring metal ore exporters to submit plans for smelters, ahead of a ban on all mineral ore exports in 2014. Bauxite is the ore used for the production of alumina, which is the main material for primary aluminium.

Bosai Minerals is planning to invest about $1 billion in an alumina project in Indonesia which would include a bauxite mine, a 2 million-tonne-per-year alumina refinery, a power plant and a port, said a company official with direct knowledge of the plan.

Bosai is eyeing a majority stake in the project, he added.

"We are in talks with more than one company in Indonesia," the official said, who declined to be identified due to the sensitivity of the negotiations. "We would sell most of the alumina in the Chinese market."

China Nickel Resources Holdings said in June it will invest $1.8 billion in an Indonesian steel project with a local minority partner. Other firms have also submitted plans for smelters, with details slowly emerging.

Indonesia's Chamber of Commerce said the plans were positive as the country needed around 30 smelters for various metals, while the country's industry minister has said aluminium should be the second most important metal industry after steel.

Its bauxite reserves could be depleted within four to five years at the current rate of exports, the government forecasts. The fast-growing G20 economy is seeing rising demand for aluminium but at the moment there is no industry to process raw bauxite in Indonesia.

ALTERNATIVE SUPPLY

Bosai also wants to double production at its bauxite mine in Guyana to 2-3 million tonnes a year, and to raise production at its Ghana mine to above 2.5 million tonnes from about 1 million tonnes currently to ease an anticipated spike in domestic Chinese prices from next year due to the drop in Indonesian supplies, the official said.

Bosai, Chalco, Weiqiao's unit Gaoxin Aluminum & Power Co Ltd, as well as Shandong Nanshan Group and Xinfa Group, are the five major alumina producers that reduced production in June after the Indonesian export tax reduced bauxite exports.

Officials at Chalco and Weiqiao also said their companies were considering separate investments in alumina projects in Indonesia.

"We are stepping up works after Indonesia cut bauxite exports," the Chalco source said.

A source at Weiqiao added: "We are considering to build alumina plant because that is what the Indonesian government wants. "Should we decide to do it, the progress could be very fast." (Additional reporting by Fergus Jensen in Jakarta; editing by Neil Chatterjee and Keiron Henderson)