A major expansion of Queensland’s Yarwun alumina refinery has suffered a setback, amid uncertainty over a $A24.2-billion deal between Rio Tinto and Chinalco.
The deadline for the Aluminum Corporation of China (Chinalco) to agree to help fund the Yarwun expansion has been extended from May 31 to June 15.
It is the second time the deadline has been extended, after an earlier change from March 31 to May 31.
Chinalco had agreed to take a 50 per cent stake in the Yarwun refinery for $A622 million, as part of a proposed $A24.2 billion deal with Rio Tinto announced in February.
Chinalco planned to fund half the expansion costs incurred after the agreement was reached.
But with shareholders angry over aspects of the deal and Australia’s Foreign Investment Review Board (FIRB) yet to approve it, Chinalco’s participation in the refinery expansion, known as Yarwun 2, is uncertain.
The expansion of Yarwun would more than double the refinery’s production, from two million tonnes of alumina to 3.4 million tonnes by 2011.
The Yarwun 2 expansion was approved in July 2007 and is 29 per cent complete.
In a statement, Rio Tinto said the deadline extension was requested by the Chinese state-owned company to allow it to complete project evaluation and approvals processes.
The move comes amid ongoing debate about Chinalco’s planned investment in Rio Tinto.
On Monday, The Age newspaper reported that the businessman Ian Melrose would spend $200,000 this week on a TV-advertising campaign to reinforce opposition to the Rio Tinto-Chinalco deal.
The report said Mr Melrose will use images of the Tiananmen Square massacre to highlight his opposition to the planned deal.
The federal government is due to decide by June 15 whether to approve the deal. Opposition leader Malcolm Turnbull has said he is opposed to it in its current form.
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