Good news for IMA.(Reuters)Updated: 2008-09-01 14:35 Counter:6...

Good news for IMA.

(Reuters)
Updated: 2008-09-01 14:35
Counter:6

Anglo-Russian miner Aricom will supply 50,000 tonnes of ilmenite, or about a sixth of its annual output of the raw material, to its titanium sponge venture in China, a company official told Reuters on Friday.


Aricom's Kuranakh mine in the Russian Far East will be the exclusive supplier of ore to the Chinese plant, which it owns together with Aluminum Corp of China (Chinalco). Production is scheduled to begin in 2010, the company said in a statement.


"We'll supply the ilmenite at (a) market price," said Charlie Gordon, Aricom's investor relations officer. "It's a very strong market. Titanium has one of the best outlooks in the entire industry."Aricom owns 65 percent of the joint venture and Chinalco 35 percent. The companies are investing $69 million and $37 million respectively in the project to build the 15,000 tonnes per year titanium sponge plant in the northern Chinese city of Jiamusi.


Gordon said they planned to build a second stage, doubling capacity to 30,000 tonnes per year, after the first stage was completed.


Aricom will supply its initial $69 million contribution from existing funds, he said. Construction will begin after an official launch ceremony on Sept. 10.


State-controlled Chinalco, China's largest aluminium company and the parent of listed Chalco <2600.HK> <601600.SS>, will take all of the titanium sponge to be produced by the plant.


Titanium sponge is further processed into titanium metal, which is used in aerospace applications and as a lightweight alternative to other metals in golf clubs and bicycle frames.


Aricom's Kuranakh project, which became the company's first operating mine when it started production at the end of last year, will produce 290,000 tonnes of ilmenite and 900,000 tonnes of titano-magnetite iron ore concentrate when at full capacity.


Aricom has an off-take agreement with China National Gold Group Corp for up to its entire output from Kuranakh, but retains the right to sell the ore elsewhere.


Aricom, a FTSE 250 company valued at $876 million, is also developing two, larger iron ore projects in the Russian Far East, which it expects to start operating from 2010.


Its shares rose more than 10 percent by 1100 GMT