Chalco to bid again for the Aurukun bauxite deposits on the Cape York

CHINESE aluminium giant Chalco says it could bid again for the Aurukun bauxite deposits on the Cape York Peninsula after burning $100 million in an unsuccessful attempt to shore up a mine and alumina refinery before being stripped of the leases by the Queensland government last year.

The Hong Kong-listed aluminium giant and other potential bidders are believed to be pressing the recently elected Newman government, which plans to auction tenements, to do more work on environmental, native title and infrastructure issues before calling for tenders.

Without this, they say, they may not be prepared to put work and money into bidding for the tenements, which the state has been trying to get developed for nearly 40 years.

Chalco Australia's latest financial reports, filed with the Australian Securities & Investments Commission recently, show the company wrote off $47.2m of costs related to development of the mine and refinery after failed attempts to get the previous Bligh government to drop a refinery requirement.

This followed a $53m cost impairment after it concluded that building a refinery to process the bauxite in Australia -- a commitment it made in 2007 to win a previous auction of the tenements -- was not a viable proposition.

Despite the losses, and a statement in its report that it had no plans to continue with the Aurukun project, Chalco has remained in contact with the Queensland government about the leases and has kept up a relationship the local Aurukun community.

Potential bidders might baulk at spending millions of dollars preparing a tender while being squeezed by high costs and low commodity prices, one said. A state government spokesman said the tender process was still being finalized and was yet to go to cabinet.

Early last month, the Newman government became the latest in a long line of Queensland governments trying to promote development of Aurukun, when it said the leases would be put out to tender within in the next few months. The former Labor government's demands for a refinery have been scrapped as no longer viable in the present environment of high construction and energy costs.

Chalco won the refinery and mine tender in 2007 with a promise to build the refinery, beating out 10 other bidders. In fairness to losing bidders including BHP Billiton, Rio Tinto, Rusal, Vale, Hydro and Xstrata, the government decided to call for new tenders rather than let Chalco mine the deposit and export the bauxite instead of building a refinery.

In 1975, the Bjelke-Petersen government awarded the leases to a company that sold them to France's Pechiney. The leases were cancelled in 2004 by Premier Peter Beattie, who awarded the bid to Chalco in 2007.