Alcoa has secured a US$255 million (500 million reals) loan from the Brazilian National Development Bank (BNDES) to develop a bauxite mine in that country's northern region.

The funds represent only 22 per cent of the total investment, according to BNDES. On that basis, the project would be valued at just under US$1.16 billion.

The mine, due for commissioning in 2008, is expected to produce 2.6 million metric tonnes of bauxite per year at startup, with potential expansion to output of 12 million tonnes of bauxite per year.

The Brazilian bank announced the loan on Monday.

Alcoa Aluminio, the local unit of aluminum giant Alcoa, will use the funds to develop the mine infrastructure and logistics for the complex near Juruti, in northern Brazil's Para state, BNDES said.

The project also includes development of 55 kilometres of roads and rail lines to connect the mine to new port facilities on the Amazonas river.

Juruti will supply bauxite

The bauxite from Juruti will be used to supply the Alumar smelter and refinery at Sao Luis.

Alcoa Aluminio holds a 35 stake in Alumar.

Alcoa currently has annual installed production capacity of about 300,000 tonnes of primary aluminum, 800,000 tonnes of alumina and 2.5 million tonnes of bauxite in Brazil, a country in which it has operated for 42 years.

On September 3, the world's No. 2 aluminium company said it planned to increase its holdings across South America by 25 per cent, by growing its forged wheel division, saying it had already consolidated distribution agreements in Brazil, and was expanding the business to Chile, Bolivia, Paraguay, Uruguay and Peru.

"The Brazilian distribution network, formed by DPaschoal and Pneauc, has sold more than 25,000 Alcoa forged aluminum wheels since 2004 when it started in the country," Alcoa said.

Widely used in the United States and Europe, forged aluminum wheels are manufactured by Alcoa Wheel Products International, with units in South America, the United States, Europe and Asia.

The wheels are applied in heavy vehicles, like trucks, buses and trailers.

business@gleanerjm.com