Aluminum Corp. of China said it will invest $19.5 billion in Rio Tinto Group, easing the Anglo-Australian miner's heavy debt burden while securing Chinese access to long-coveted mining resources.

The deal is China's biggest overseas investment so far.

Chinalco, as the state-owned aluminum producer is also known, pledged $12.3 billion for stakes in joint ventures in aluminum, copper and ore mining with Rio Tinto - the world's third biggest miner.

The remaining cash will pay for $7.2 billion in convertible bonds that, if redeemed for shares, would almost double Chinalco's existing 9.3 percent stake in Rio Tinto Group to 18 percent.

Chinalco's earlier investment in Rio Tinto resulted from the 2008 purchase, with Alcoa Inc., of a 12 percent stake in Rio Tinto PLC, the group's London-listed unit. Alcoa and Chinalco announced Thursday that the Chinese company would purchase Alcoa's share in that deal for $1.02 billion by July.

If approved by regulators and shareholders, the deal with Chinalco will aid London-based Rio Tinto's quest to pay off about $10 billion of its $38 billion in debt by the end of 2009. The company is axing some 14,000 jobs worldwide, selling assets and cutting capital spending to cope with a collapse in commodity prices triggered by the global credit crunch.

In November, rival miner BHP Billiton canceled a $68 billion bid to take over Rio Tinto, citing the latter's debt as a major risk.

Apart from the financial boost, the deal ensures Rio Tinto's access to China's market, which accounts for an ever-growing share of world demand.

Despite China's own economic woes as demand for its exports slumps, Beijing remains determined to secure future resources for key industries. A possible expansion of Chinalco's holdings in Rio Tinto has been expected for months.

Rio Tinto will retain operational control of the joint ventures, with the Chinese company holding a maximum stake of 50 percent, in the Yarwun, Australia, aluminum mine. Stakes in other joint ventures will range between 15 percent to 49 percent, it said.

BHP Billiton to Cut 6,000 Jobs

BHP Billiton, Australia recently announced that 6,000 employees in its mines in Chile, the U.S. and Australia will be laid off as a result of the impact of global economic meltdown and falling metal prices worldwide. This announcement has taken the total number of job cuts by BHP Billiton to 8,500 since June 2008. The company also indicated that all of its expansion projects have been deferred. BHP Billiton employs more than 100,000 people globally, with 40 percent permanent employees and the rest on contract. Most of the job cuts will be in contract employment. Of the 6,000 jobs, about 3,400 layoffs will be in Australia.

BHP Billiton's $2.2 billion Ravensthorpe nickel mine in Western Australia has been closed, leading to 1,450 job cuts. The production of nickel in the Mount Keith mine, also in Western Australia, will be reduced with 300 workers laid off because of the steep fall in commodity prices. About 350 jobs will be cut at the Yabula nickel refinery in Townsville, Queensland, while 1,100 employees in BHP Billiton's coal operations in the state have been laid off. Coal production is also likely to be reduced by 10 to 15 percent. The highly publicized $15 billion expansion of the Olympic dam project in Southern Australia will also be deferred. The Olympic dam project, which consists of uranium, gold and copper mines, may also face up to 200 job cuts. But BHP Billiton will go ahead with its investments in petroleum and iron ore, targeting 130 million tons per year in iron ore production.

The mining operations in Chile have also been affected by BHP Billiton's current employee severance policy. Of the 2,000 job cuts announced, around 84 percent have been in contract employment. The company's Chile operations employ more than 18,000 people, of which only 6,000 are full-time employees. BHP Billiton operates the Cerro Colorado, Escondida and Spence mines, which are all located in the northern part of the country. Although there have been no production cuts in these mines, all expansion projects have been put on hold.

BHP Billiton Earnings Up for Second Half of 2008, Project Deferrals and Suspensions Likely to Continue

Australian miner BHP Billiton reported earnings for the half-year ending December 31, 2008. The company's earnings before interest and taxes (EBIT) were up 23.7% year over year, moving to $11.90 billion from $9.62 billion earned in the second half of 2007. Excluding exceptional expenses, the company's total attributable profit was up 2.2% year over year, reaching $6.13 billion. However, BHP Billiton's exceptional expenses, which included the suspension of the company's Ravensthorpe nickel operations in Australia and the decision to not pursue a merger with Rio Tinto, United Kingdom, reduced the company's actual attributable profit more than $4.67 billion.

Since June of last year, BHP Billiton has cut more than 8,500 jobs in the face of steeply declining commodity prices. In November 2008, the company gave up a year-long pursuit of a merger with British-based miner Rio Tinto, resulting in expenses of $450 million, which were also listed as expenses during the half-year period.

AFRICA

Areva Group to Begin Work on Niger's Imouraren Uranium Mine

Areva SA, France. announced that it has been awarded the license to build and operate the uranium mine at Imouraren in Niger. Imouraren lies in the uranium-rich Aagadez region of the country. Areva will hold a 66.65% stake in the mine while the rest will be held by the Niger government. The expected investment will be around $1.6 billion, of which more than $1 billion will be invested by Areva. The mine will produce 5,000 tons per year of uranium during a 35-year period and employ around 1,400 people. Once operational, the Imouraren mine will be the largest uranium mine in Africa and the second largest uranium mine in the world. Mining is expected to begin in 2012, and will be carried out using the in-situ leach (ISL) technique.

Traditionally, uranium is mined by moving ore from the ground to the surface, where the ore is broken apart and the mineral is separated. In the ISL method, the ore is left in the ground and the mineral is dissolved in a solution. The solution is then pumped to the surface, and the mineral is recovered. This technique is also called solution mining.

Areva renewed its deal with Niger in January 2008 when the price of uranium was around $90 per pound. Recently, uranium prices have fallen steeply, hovering at about $53 per pound. Despite the fall in price, Areva indicated that it will still go ahead with the mining operations, while many other projects on the African continent were deferred because of plunging mineral prices.

Arlit and Akouta, two operational mines in Niger, account for 7.5% of the world's total uranium production. Areva holds a majority stake in both these mines. The Imouraren mine, which lies 80 kilometers south of Arlit, was discovered in 1966 and has an estimated measured uranium deposit of 146,000 tons of uranium metal of grade 0.11%.

ASIA

India's NTPC Plans $3.6 Billion Investment in 2009-10 for Capacity Expansion and Coal Mining

NTPC Limited recently announced plans to invest more than $3.6 billion in mining activities and augmentation of power generation capacity during the next fiscal year. The capital expenditure outlay for 2009-10 will be 33% higher than the investment plan of $2.58 billion for 2008-09. In the current fiscal year, NTPC plans to raise $500 million from international markets, while $410 million will be raised through private placement of bonds in the domestic market. More than half of the proposed investments for this year have already been made.

NTPC will increase its power-generation capability by 2,800 megawatts (MW) and also commence work on mining operations by mid-2009. The budgeted plan for 2009-10 does not include investments in NTPC's joint venture companies. The firm will also take part in power trading and acquire gas and coal assets in India and abroad in addition to venturing into India's liquefied petroleum gas and hydropower sectors. The company will also provide consultancy services in the Asia Pacific region and Africa.

NTPC's demand for coal during the current Eleventh Five-Year Plan (2007-12) is estimated to be around 230 million tons. The firm has stated that it plans to import 10.25 million tons of coal in 2009-10 and 2010-11, but this could change with the implementation of new projects. Experts indicate that at least 10% of NTPC's demand will be imported every year until 2012. NTPC is therefore eager to enter into the mining sector to ensure a steady and stable supply of coal for its power plants in the country.

The company's strategy to reduce dependence on feed imports, however, has met a few challenges. Earlier, there were reports of delays caused by pending environmental clearances, land acquisition and other issues. Recently, the coal ministry threatened to withdraw six coal blocks that were allocated to NTPC that were lying idle as NTPC has not yet commenced development of the blocks. NTPC has announced that an estimated $489 million will be spent on development of mines and allied infrastructure in 2009-10. While work on the mines will begin in the next fiscal year, it will take up to 43 months for the mines to come into commercial operation. The mines are expected to produce more than 47 million tons per year of coal by 2017, which will amount to nearly 20% of the firm's annual coal demand at that time.

NTPC, India's largest power producing company, will invest more than $40 billion during the next five years on expansion. The company operates 27 power plants, including seven gas-fired power plants, 15 coal-based power plants and four plants on a joint venture basis. The total installed power generation capacity of the company, which is currently around 29,394 MW, is expected to reach 50,000 MW by 2012.

Orissa Mining Plans Iron Ore Processing Facility

It is reported that the Orissa Mining Corporation proposes to set up a 2.5 million tonne crushing system along with conveyance and mechanized wagon loading facility at its Daitari mines.

This is the second project to be taken up by OMC at Daitari mines to raise the iron ore handling capacity. The mines are well connected by rail and road and have the potential to augment production from 2 million tonnes per annum at present to about 6 million tonnes per annum.

As per report, the project is expected to be completed in about 3 years time.

The project will require an investment of around INR 318 crore (65.076 crore US Dollar) which the corporation plans to finance from internal resources.

Pricewaterhouse Coopers has been appointed as the transaction consultant for the project. The tender to appoint a technical consultant for the project is under the process and will be finalized soon.

While the mines owned by OMC have estimated iron ore reserves of about 85 million tonnes, there is a possibility of additional reserves of about 50 million tonnes. At a production rate of 6 million tonnes per annum, it can sustain for about 20 to 25 years.

Sri Lanka's War-Torn East Coast to Become a Heavy Mineral Mining Hub

Sri Lanka's government has approved a memorandum presented by the Ministry of Industrial Development to develop the exploration and mining industry on the country's east coast. The land from Naayaaru lagoon in Mullaitheevu to Nilaveli in Trincomalee district will be tapped for heavy minerals like rutile, ilmenite and zircon. Illeminite and rutile are major sources of titanium. Titanium, known for its strength and light weight, is used extensively in military aircrafts, jet engine components, submarines, rockets, armor plates and aircraft firewalls. Zircon is used in foundries, electrical equipment and ceramics.

Nilaveli has faced civilian casualties and collateral damage since the 1970s as a result of a violent campaign by the Liberation Tigers of Tamil Eelam against Sri Lanka's government, seeking an independent state. The mineral deposits in this region have been untapped for years. With the Tigers' recent withdrawal from this territory, the government is proposing to mine the mineral resources and provide economic development. There are plans to declare the region between Naayaaru and Nilaveli as a special economic and security zone. Sri Lanka's beaches have some of the richest deposits of rare earth minerals in the world. It is estimated that the concentration of heavy minerals is about 60%-70% compared with the 5% concentration found in the sands of Australia, currently the world's largest heavy minerals producer. According to a recent survey conducted by the government, Sri Lanka's east coast has about 12 million tons of heavy mineral deposits.

The prospecting, exploration and mining will be undertaken by Lanka Mineral Sands Limited, Sri Lanka. Established in 1960, Lanka Mineral is the country's premier heavy metals mining company. The government will invest in enhancing the production capacities and processing technologies. The company will eventually also manufacture value-added products like titanium slag, titanium sponge and ferro-titanium. The mining of heavy minerals on the east coast will be carried out as a joint venture with Stork Handelsges m.b.H, Austria.

China Coal Begins Construction of 20 Million-Ton Mine in Shanxi Province

China National Coal Energy Group Corporation, also known as China Coal, has begun construction of the Pingsuo Donglutian coal mine in central China's Shanxi province. The mine is located in the northern part of the Ningwu coalfield, covering 48.73 square kilometers in Suozhou City. The mine has a thick coal seam, good coal quality, shallow coverage and simple geologic structure, with a total reserve of about 1.85 billion metric tons.

The project has been listed as a key project in the country's Eleventh Five-Year Plan for the coal industry, and it is also an important part of the 100 million-ton Pingsuo Mining Zone proposed by China Coal. China Coal Pingsuo Coal Industry Company Limited, a subsidiary of China Coal, is responsible for the construction as well as the future operation of the project.

Construction comprises a 20 million-metric-ton open coal mine, a 20 million-metric-ton coal-selection plant and a 27-kilometer railway. The mine's expected service life will be 75 years, and the designed annual transportation capacity of the railway is 32.5 million tons. According to the project's schedule, the project will be completed in three years and achieve its designed capacity in two years.

On the same day, CCPCIC also signed a joint venture agreement with Shan International Energy Group Corporation Limited to build two 300-megawatt circulating-fluidized-bed combined-cycle units by utilizing coal gangue in Pingsuo.

Indian Government Clears Mining Proposals by Rio Tinto, Tata Steel and De Beers

India's Ministry of Mines recently cleared several proposals submitted by Indian and international companies in areas of prospecting, exploration and ore mining. The ministry has forwarded the proposals by Tata Steel Limited and global diamond giant De Beers to Andhra Pradesh's government for further action.

De Beers has applied for a prospecting license for diamond and other allied minerals in the Kurnool and Gooty reserve forests in Andhra Pradesh covering an area of over 60 square kilometers. Tata Steel has applied for 35 square kilometers of mining leases for rutile, manganese ore and illemenite in the Vizainagram and Srikakulam areas. In December 2008, Tata Steel also received a prospecting license for iron ore mining in Maharashtra. An area of 172 square kilometers has been approved for this operation. Tata Steel will apply for the mining leases after completing prospecting and identifying the available iron ore reserves. As per the mining policy, though Tata Steel has received a prospecting license, the company does not own the mine. The company will be given priority, but the mining lease can be awarded to another company.

Adi Gold Mining Private Limited has been granted approvals to mine lead, zinc, antimony, copper, silver, cadmium, iron ore, cobalt and other minerals more than 3,504.39 square kilometers in the Seoni Narsingpur and Hoshangabad districts of Madhya Pradesh. Adi Gold Mining is a fully owned subsidiary of mining firm Pebble Creek Resources, Canada. NAD Private Limited's proposal for a prospecting license for nickel, iron ore, vanadium, manganese ore and titanium in the Sidhi district of Madhya Pradesh has also been cleared. The company has been allotted 2,458 square kilometers for this operation.

ACC Rio Tinto Exploration Company, a joint venture between Associated Cement Companies Limited and Rio Tinto plc, has received a reconnaissance license to explore gold, copper, diamond and zinc in Andhra Pradesh. The Ministry of Mines issues reconnaissance permits to conduct initial mineral prospecting using geological mapping as well as geophysical, regional, geochemical and aerial surveys. The survey will be carried out in the Nalgonda region of Andhra Pradesh over an area covering 8,350 square kilometers.

The Ministry of Mines has cleared prospecting proposals submitted between 2000 and December 2008. Almost 280 companies have received approvals covering an area of more than 390,308 square kilometers. This move is seen as a step by India's government to clear out backlog of proposals and expedite the operations of mining projects in the country.

Sesa Goa, India, Plans $82 Million Iron Ore Development and Expansion

India's largest exporter of iron ore in the private sector, Sesa Goa Limited of Panaji, Goa, announced plans to invest $82 million over the next two years towards development of mines and infrastructure. The firm is also looking to cash in on the prevalent buyers' market to pick up stakes in mines in India and abroad. Sesa Goa has also embarked on an expansion program to boost production capacity by 25 to 30 percent at an investment of $41 million.

Sesa Goa ended the fiscal year 2007-08 with a total iron ore production of 12.4 million tons, registering a 14 percent increase in production over 2006-07. The firm is also intent on achieving a growth target of 30 percent for output in the present financial year despite the fall in the price of iron ore from $150 per ton to $50 per ton. The firm claims that it is well disposed to withstand lower prices and the slump in the market through low production costs. The firm incurs a production cost of $18 per ton of iron ore and claims to produce of iron ore at a lower cost than any other iron ore producer.

On October 31, the Indian government imposed a flat-rate tax of $4.20 per ton on exports of iron-ore fines. Following protests from producers of low-grade iron ore, the government withdrew the flat-rate tax and instituted a value-based duty of 8 percent. India, one of the top three exporters of iron ore worldwide, exports 90 million to 100 million tons per year of iron ore. Exports are likely to drop by 45 percent to less than 60 million tons in the current fiscal year. Investment banking giant, UBS, has projected a 40 percent decline in the prices of most metals including iron ore for 2009.

Indonesia Awards Iron Mining Contract to Australian Firm Subsidiary PT Jogia Magasa

PT Jogja Magasa Iron, a subsidiary of Indo Mines Limited, Australia, has obtained approval from Indonesia's government to mine iron ore deposits in Kulon Progo, in central Java's Yogyakarta province, Industrial Info Resources reports. Indo Mines has a 70 percent stake in PT Jogja Magasa Iron while PT Jogja Magasa Mining, Jakarta, owns the remaining 30 percent. PT Jogja Magasa Iron signed a 30-year contract with the Indonesian government to develop the iron sand reserves spread over 2,987 hectares in the Kulon Progo region. The contract permits the company to mine iron sand and convert it into pig iron. This is the first mining contract awarded by the Indonesian government in a decade, and the pig iron smelter to be set up will be the first in the province.

The $1.7 billion project includes a 350-megawatt power plant and a port. According to Lutfi Heyder, President Commissioner of PT Jogja Magasa Iron, the iron sand processing and the power plant will need about 4 million to 5 million tons per year of coal supplies.

The area has iron sand reserves of about 273 million tons, which is equal to about 33.6 million tons of pig iron. Mining is scheduled to begin in 2011, and commercial production is expected to begin in 2012. The project will begin only after the environmental impact assessment approval is obtained. The company aims to produce 1 million tons of pig iron in the first year of operation and the whole amount will be sold to the domestic market. This is because the domestic free-on-board price is close to that in the international market. The company has already signed a memorandum of understanding with PT Krakatau Steel, Jakarta, under which it will supply the latter with 100,000 tons of pig iron per year. The state-run PT Krakatau Steel is Indonesia's largest steel-making company.

According to Purnomo Yusgiantoro, Indonesia's Minister of Energy and Mineral Resources, the mining project is expected to generate about $20 million per year in tax revenues and $11.25 million per year in royalties. He has also said that during the first decade of operations, the company would contribute 1.5 percent of its gross profit toward the development of the Kulon Progo area. The amount would go up to 2 percent after a decade.

Indonesia has huge deposits of copper, gold, nickel and tin, all of which have attracted leading global mining firms to begin operations in the country. The government has set a mining investment target of $1.55 billion this year. The target does not include oil and gas.

India's NMDC Increases Provisional Iron Ore Price

Rana Som, Chairman of India's state-run NMDC Limited, Hyderabad, Andhra Pradesh, recently announced that the long-term prices of two grades of iron ore would be provisionally increased. The increased prices will be backdated to April 1, the beginning of the current financial year. NMDC's domestic customers will now have to pay 10.5 percent more for its iron ore fines and 33 percent more for most of its iron ore lumps. About 1 percent of NMDC's sales are accounted for by a special grade of iron ore lump, which has gone up in price by about 40 percent. Iron ore fines, which make up 55 percent of NMDC's domestic sales, are a powdery raw material that is made into pellets before being used in blast furnaces. Iron ore lumps, on the other hand, do not need much processing and can be used directly in blast furnaces.

However, global prices of steel and other commodities are declining. Domestic steel producers have expressed concerns over the prices and are ready to begin negotiations to lower them. The higher prices will raise steel-making costs by $22 to $30 per ton, which will have to be passed on to customers. Such a move could ruin the government's efforts to rein in steel prices. Steel producers are already being affected by the high cost of steel manufacture and the growing demand for lower product prices. Further, private mine owners have reduced iron ore prices significantly.

While NMDC's fines are sold at about $40 per ton, privately run mines have dropped their prices to about $20 per ton. NMDC's other iron ore grades are priced at similarly higher rates compared with prices quoted by private miners. In view of the global rates, NMDC may announce a rollback of its provisional price hike within the next few weeks, although it has said that the proposed price hike is a measure to insulate the company from short-term market fluctuations. NMDC has also said that the price hike was a part of the agreement with its customers.

NMDC produces about 15 percent of India's iron ore and it operates three mines: one in the state of Karnataka and two in Chhattisgarh.

Despite the displeasure of domestic customers, NMDC's hiked rates are much lower than those announced by other global majors. Vale, Brazil, has increased its prices by 71 percent for its Chinese customers while Rio Tinto, London, has raised its prices by 96 percent for its Japanese customers.

AUSTRALIA

China's Minmetals Looking To Buy More Australian Mines

Chinese state-owned metals group Minmetals is planning to use its $1.7 billion acquisition of debt-crippled Australian miner Oz Minerals Ltd (OZL.AX) to buy more distressed firms, Oz Managing Director Andrew Michelmore said recently.

"They (Minmetals) want this as their offshore vehicle to grow their base metals business," Michelmore said in an Australian Broadcasting Corp television interview.

"They are going to see this as a platform to really grow their business," he said.

Beijing is encouraging a drive for acquisitions in Australia by its government-backed entities during a low-point in the commodities cycle, a strategy raising concerns among Australian unions and some politicians.

Michelmore said Minmetals at first was looking only to buy some of Oz Minerals mines, dotted across the Australian outback and Southeast Asia before deciding last week to launch a cash offer for the entire company.

Oz Minerals board has unanimously backed the offer in the absence of a better offer.

Flush with state funds, China has emerged as a white knight for Australia's struggling mining firms hit hard by the global collapse in commodities markets, culminating this month with an offer by state-owned Chinalco to invest $19.5 billion in Rio Tinto Ltd/Plc

Australian two biggest mining unions, the Australian Workers Union and the Construction Forestry Mining Energy Union are demanding Australia's prime minister, Kevin Rudd, monitor Chinese investments in the country's mining industry for signs of market manipulation.

Australia Clears Xstrata to Restart McArthur River Zinc Mine

Xstrata will immediately restart its controversial McArthur River lead and zinc mine in northern Australia after the Australian government approved the mine's expansion.

Some Aboriginal groups had appealed against a decision by Australia's previous government to approve Xstrata's plan to divert the river to expand the mine, bringing operations to a halt on Dec. 17.

Environment Minister Peter Garrett said in a statement the mine was clear to restart as long as Xstrata monitored the environmental impact on the 385-kilometre (185-mile) McArthur River.

Xstrata had warned failure to let the expansion proceed would spell the end of the operation

The mine opened in 1995 as an underground operation, yielding 320,000 tonnes annually of lead and zinc in bulk concentrate, or ground ore, form. Its output is sold mostly to Europe and Asia, where it is smelted.

The underground veins have been mined out but the site still contains one of the world's largest deposits of zinc and lead. Xstrata has said that by converting to open pit it can operate another 25 years at the same level of production.

However, Xstrata had already cut ore production by 20 percent because of low metals prices, before the December suspension, resulting in the loss of 68,000 tonnes of concentrate, containing 31,700 tonnes of zinc metal and 7,200 tonnes of lead. Garrett said new conditions allowing reactivation of the mine included a comprehensive monitoring plan for marine sediment, mine site sediment, seawater, natural surface water and groundwater.

RUSSIA

Russia's ARMZ Acquires Stake in Uranium-Mining Joint Ventures in Kazakhstan

JSC Atomredmetzoloto, Russia, also known as ARMZ Uranium Holding Company, a subdivision of the Russian Ministry of Atomic Energy, is acquiring stakes in two joint ventures involving uranium mining in Kazakhstan from Effective Energy NV, Netherlands. ARMZ will secure a 50% interest in TOO Karatau and a 25% interest in JSC Akbastau from Effective Energy for an undisclosed amount. The acquisitions will enable the consolidation of all Kazakhstan-based uranium-mining assets owned by Russian entities.

The joint ventures were set up according to an inter-governmental agreement between Russia and Kazakhstan on the use of atomic energy. The two nations have equal ownership in the joint ventures. State-owned nuclear corporation Kazatomprom, Kazakhstan, holds Kazakhstan's 50% stakes in the joint ventures. ARMZ's acquisitions will lead to the redistribution of Russian equity stakes, while Kazakhstan's holdings in the ventures will remain unaffected.

TOO Karatau is already in commercial operation and produced 653 tons of uranium in 2008. JSC Akbastau is currently in the pre-production phase and is scheduled to commence mining operations later this year. ARMZ's acquisition of equity stakes in the joint ventures is expected to boost global uranium production by 7%.

In January of this year, India and Kazakhstan entered into a civil nuclear pact, under which Kazakhstan will supply fuel to India's nuclear power plants. Kazakhstan is likely to become India's largest supplier of fuel. Kazatomprom and Nuclear Power Corporation of India Limited entered into a memorandum of understanding for cooperation in several aspects of the nuclear sector, including joint extraction of natural uranium from mines in Kazakhstan and the delivery of natural uranium and fuel for India's reactors. Kazatomprom expects to realize all plans with India within a month of signing a bilateral treaty between the two nations regarding the use of atomic energy for peaceful purposes.

Kazatomprom is set to emerge as the world's largest producer of uranium in 2009. Kazakhstan's uranium output is expected to reach 11,935 tons in 2009, registering an increase of more than 40% over last year's production of 8,521 tons. The Khorasan-1 and Khorasan-2 mines are scheduled to commence commercial operations in 2009 and will have production capacities of 3,000 tons per year and 2,000 tons per year, respectively. By mid-2010, Kazakhstan expects to complete the establishment of technical foundations required to boost the country's uranium output to 27,000 tons per year. Takeover Documents for Rio Tinto

NORTH AMERICA

Alcoa Finalizes Power Contract for Massena Operations

Alcoa announced it finalized a 30-year hydropower contract to supply the company’s two aluminum smelters in Massena, NY. The power agreement is contingent upon an upgrade of facilities by Alcoa.

The contract keeps the company’s $350 million annual economic impact and at least 900 jobs in northern New York. Alcoa has been operating in the North Country since 1902, and its two smelters in Massena have a combined output of 255,000 metric tons per year (mtpy).

Under the terms of the contract New York Power Authority (NYPA), will supply power to the operations in Massena for a term of 30 years following the expiration of Alcoa’s current power contract in 2013, with the option to extend the contract for an additional 10 years under certain economic conditions.

In turn, following completion of feasibility and engineering studies to finalize exact costs and plans, Alcoa would invest a minimum of $600 million to modernize its operations. The modernization project would increase the smelting capacity at Massena to 278,000 mtpy and would provide significant environmental benefits, including a 70-percent overall reduction in greenhouse gases. The modernization is key to the long-term viability of operations.

Detailed planning for the modernization project is already underway. A final proposal for an investment decision will be submitted to the Alcoa Board of Directors when completed. If approved, the modernization is expected to be complete by 2013, with the vast majority of the costs to be in the outer years of the project. Approval of the project is the final step in the execution of the power contract between Alcoa and NYPA.

SOUTH AMERICA

Tata Steel Secures 63 Million Tons of Iron Ore from Vale

Brazilian mining company Vale (NYSE:RIO) has signed a five-year iron-ore supply contract with Corus, London, a subsidiary of India's Tata Steel Limited, in which Vale will supply Corus with 63 million tons of iron ore for five years beginning in 2009, Industrial Info Resources reports. This is one of the largest contracts ever signed between a steel-making company and an iron ore supplier. Corus and Vale have had business relations since 1942, when Vale was set up. Since iron ore prices have fallen significantly over the last few months, the timing of the contract should benefit Corus.

With this contract, Tata Steel has strengthened its strategy for acquiring raw materials for its European operations. External sources have been combined with future captive supplies. Although the details of the contract are not known, assuming a uniform supply over the five years of the contract, 63 million tons will meet less than one-third of Corus' annual requirements. Producing 1 ton of steel requires 1.8 tons of iron ore, and Corus has a crude steel production capacity of about 20 million tons per year.

Tata Steel is trying to ensure a continuous supply of iron ore for its various steel plants by signing contracts, acquiring companies, and forming joint ventures with various iron ore suppliers worldwide. It is making efforts to secure 50-60 percent of its iron ore supplies within the next five to six years. Earlier this month, Tata Steel's Singapore subsidiary, Tata Steel Global Holding Private Limited, signed an agreement with Canadian mining company New Millennium Capital Corporation (NML) (CVE:NML), Westmount, Quebec, in which Tata Steel will acquire a 19.9 percent stake in NML for $22.6 million. In addition, Tata Steel may invest another $300 million to obtain a controlling stake in NML's direct shipping ore (DSO) project. The DSO is estimated to have 100 million tons of iron ore reserves. If the DSO project works out, this could be the first captive source of iron ore for Corus. Corus could then be able to procure iron ore from NML from 2010. Tata Steel already has exclusive rights to the LabMag taconite iron ore property in Newfoundland and Labrador. NML owns 80 percent of the property, which is estimated to contain 3.5 billion tons of mineral reserves. Given its favorable location, Canada is a good source of iron ore for Tata Steel's European operations.

Tata Steel's Singapore subsidiary has also signed created a joint venture with the largest steel company in Vietnam, Vietnam Steel Corporation (Hanoi), and Vietnam Cement Industries Corporation (Hanoi), to set up a greenfield steel complex in Vietnam. The joint venture also entitles Tata Steel to acquire a 30% stake in the Thach Khe Iron Ore Joint Stock Company, which will take up mining in the Thach Khe iron ore mine for the steel unit.

Tata Steel Cote d'Ivoire S.A. (Abidjan, Ivory Coast) is a joint venture formed in December 2007 between Tata Steel and Sodemi, a state-owned company of Ivory Coast, to develop an iron ore mine in Mount Nimba located in the western part of the country. Tata Steel at that time had announced plans to invest $1 billion to $1.5 billion in order to develop the mine. One of the largest mines in West Africa, the Mount Nimba mine is spread over the three nations of Ivory Coast, Liberia, and Guinea. About 700 million to 1 billion tons per year of iron ore are expected to be obtained from it. Tata Steel's facilities in Britain and the Netherlands will source iron ore from this mine. Development work is yet to begin on the mine.

More recently, in September 2008, Tata Steel is known to have explored some iron ore deposits in Laos. Tata Steel has, so far, not made any announcement regarding their interest in Laos.

In Liberia, Tata Steel has been disqualified from the re-launched bidding process for the $1.5 billion iron ore deposits in the western cluster. The Liberian government has alleged acts of violation by Tata Steel during the first bidding process.

The iron ore requirements of Tata Steel's steel units in India, with a capacity of 5 million tons per year, are met by its own iron ore mines. In order to meet the requirements of its overseas unit, Corus, and other steelmaking acquisitions, the company has been scouting worldwide for iron ore suppliers.

McIlvaine Company

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