Japan and Brazil: $2.6 Billion Aluminum Project

A recently-announced $2.6 billion aluminum project, jointly owned by Brazilian and Japanese firms, near the Amazon port city of Belem, underlines the growing popularity of energy-rich Brazil as a place for aluminum corporations to set up shop, and may lead to other Japanese-Brazilian ventures for mineral exploitation in the Amazon region.

The smelter-refinery complex, located 25 miles southeast of Belem, will use bauxite ore from the Trombetas and Paragominas mines (partially owned by Alcan and Rio Tinto Zinc, respectively), and hydropower from a dam currently under construction at Tucurui on the Tocantins River. At least half of the annual production of the smelter-refinery complex will supply roughly 10% of Japan's annual aluminum needs; the rest will be sold on the world market.

Equity in the smelter part of the complex, ALBRAS, will be 51 % owned by the Brazilian mining firm Companhia Vale do Rio Doce (CVRD) and 49% owned by Nippon Amazon Aluminum Co. (NALCO), a consortium of 30 Japanese firms including the Mitsui, Misubishi, Sumitomo, Marubeni, and Showa groups.

The aluminum refinery, under the name of ALUNORTE, will be 60.8% owned by CVRD and 39.2% by NALCO.

Financing will be handled by the Japanese private shareholders, Japan's Overseas Economic Cooperation Fund (OECF), the Japanese Export-Import Bank and private banks.

The Japanese trade minister and foreign ministers have both made visits to Brazil in recent weeks to discuss this and other projects Brazil has long sought Japanese financing participation for the proposed Grande Carajas project in Para state,, which would involve developing huge, reserves of iron ore, copper, manganese, bauxite, nickel and gold.