Anglo-Australian miner Rio Tinto and Japanese trading house Mitsui have set up a joint venture company, Lao Sanxai Minerals, to explore for bauxite in Laos, Mitsui said Friday, when it opened the JV office at Vientiane. The JV, owned 70% by Rio Tinto and 30% by Mitsui, will explore the possibility of mining bauxite in a 484 square km tenement between the Sanxai and Dakcheung areas in the southern part of Laos, the company added. Rio Tinto and Mitsui received a five-year exploration license from the Laos government in December 2008 and the JV was established in April 2010.
A Japanese company source involved in alumina projects said: "There are risks, which could be stemming from political conditions or associated with the mine itself, etc. The benefit of Rio Tinto working with Mitsui is that they have gained a partner willing to share the 30% risk." Rio Tinto, which operates one of the world's largest bauxite mines in Weipa, Australia, will lead the exploration activities. Mitsui has also said that the JV will look at alumina production if there is a proven bauxite deposit. "Most bauxite producing countries are interested in adding value to mineral products, and are eyeing alumina production ... when they issue bauxite mining related licenses," said the Japanese company source. "Only resources majors like Rio Tinto and large companies with expansive investment capabilities, are able to take part in bauxite projects," the source added. A Mitsui spokeswoman said preliminary exploration activities, which involved surveys on foot, were launched in February before the establishment of the JV. Collection of mineral samples will start in November. The overall exploration costs are estimated to be around $8 million. The Japanese company source also pointed out that the mining fees in Laos was very low. "Mining related license fee in Laos is very low, less than $120,000 per year, and it should not be difficult to renew after the current license expires in 2013," the source said. If the tenements have sufficient bauxite to produce over 2 million mt/year of alumina, the project is likely to advance into production, said a second Japanese source involved in alumina projects. Around 8 million mt of bauxite is said to be required for 2 million mt of alumina. Laos is known to have rich bauxite deposits but they have yet to be explored. A joint venture between Australian exploration company Ord River Resources and China Nonferrous Metals International Mining launched a feasibility study for a bauxite project at the Polaven Plateau in southern Laos in March, eyeing 20 million mt/year of bauxite production for 5-7 million mt/year of alumina.
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