Chalco Hong Kong Limited, a wholly owned subsidiary of Aluminum Corporation of China Ltd (Chalco), has agreed to invest and develop an alumina project in Indonesia after the southeast Asian country cut exports of the ore.

Chalco Hong Kong's move comes on the heels of plans by Bosai Minerals - one of the leading alumina producers in China - to invest about $1 billion in an alumina project in Indonesia.

These 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.

Chalco Hong Kong and PT Indonusa Dwitama will set up a joint venture to build a bauxite mine and alumina refinery in Indonesia, a report on the Chalco website said on Monday.

The report did not give any details on Chalco Hong Kong's share in the project and the total investment.

Chalco's spokeswoman Liu Qiang did not immediately return calls seeking a comment.

Chalco has an alumina capacity of 14 million tons a year, making it the country's top producer of the material used for the production of primary aluminium. Bauxite is the ore from which alumina is produced.

Indonesia, China's top bauxite supplier, imposed a 20 percent tax on exports of some metals ores, including bauxite, in May and cut shipments, affecting supply to China. Indonesia is now requiring metal ore exporters to submit plans for smelters, ahead of a ban on all mineral ore exports in 2014.

Indonesia supplied nearly 80 percent of the 26.76 million tons of bauxite China imported in the first seven months of the year, but exports fell sharply in June and July.

Chalco and Bosai are among the five major alumina producers that reduced production in June after the Indonesian export tax reduced bauxite exports.

(HK Edition 08/28/2012 page2)