China, Japan in Vietnam's $460 million alumina deal

HANOI, July 15 (Reuters) - Vinacomin, Vietnam’s largest coal producer, has signed a contract with a Chinese company to build a $460 million alumina plant in the Central Highlands, the Hanoi government said.

Vinacomin signed an Engineering, Procurement and Construction (EPC) deal with China Aluminium International Engineering Co (Chalieco) on Sunday, and Chalieco would build the plant within two years, the statement issued late on Monday said.

The alumina plant, projected to turn out 600,000 tonnes of alumina a year, is part of the bauxite and aluminium complex in the central highland province of Lam Dong, 300 kilometres (190 miles) northeast of Ho Chi Minh City.

Vietnam began building in 2006 its first bauxite and alumina complex, the $490 million Tan Rai plant, but a lack of money and domestic power shortages forced the plant developers to skip aluminium production in the complex.

Chalieco is the engineering arm of Aluminium Corp of China Ltd (Chalco) 2600.HK, China's largest nonferrous metal company.

Chalieco has placed an order with Marubeni Corp 8002.T, under which the Japanese firm would support and provide advice on legal and procurement issues on the project, which is due for completion in 2010, Marubeni said in a statement on Tuesday.

Vinacomin would start negotiations in the fourth quarter for another EPC contract to build the Nhan Co alumina plant in the same Lam Dong complex, also to produce 600,000 tonnes of alumina per year, Vinacomin Chairman Doan Van Kien was quoted in the government statement as saying.

Vietnam’s bauxite ore reserves are estimated at between 5.6 billion and 8.3 billion tonnes, the world’s third-largest after Guinea and Australia and mostly unmined.

Bauxite is the raw material used for making alumina, a white powder for producing aluminium.

Vietnam has said it needed about $15.6 billion to invest in major bauxite and alumina refining projects by 2025, to make use of its vast and largely unmined bauxite ore reserves, most of them in the Central Highlands coffee belt.

In May, the government said it would allow Alcoa Inc AA.N to own up to 40 percent of a major alumina mining and refining project in the central highland province of Dak Nong [ID:nSP155046]. (Additional reporting by Miho Yoshikawa in TOKYO) (Editing by Ben Tan)