Sino Australian Resources Co (SARCO) and China Non-Ferrous Metal Industry’s Foreign Engineering & Construction Co (NFC) have entered into a second Memorandum of Understanding (MoU) for a 20-year alumina offtake agreement for sale of alumina from Laos.
SARCO is the operating company established by Australia’s Ord River Resources and NFC to develop the Bolaven Plateau Bauxite Project in Laos which includes an alumina refinery.
The MoU involves SARCO and NFC entering into a minimum 20-year offtake agreement for SARCO to sell alumina products from Laos to an NFC-led buyer group. The agreed annual sale quantity will be 600,000 tonnes.
The sale price will be based on internationally recognized market prices and prices will be adjusted periodically to reflect market prevailing prices.
SARCO and NFC will convert this MoU into a binding contract that is compliant with internationally recognised standards in the future prior to the construction of the planned alumina refinery in Laos.
The MoU completes the initial round of negotiations for the three most important building blocks for the planned construction of a 600,000 tonne alumina refinery in Laos. The others are China Minsheng Banking Corporation’s letter of proposal for 70% debt financing and the MoU for fixed price and fixed term EPC contract with NFC for US$600 million.
SARCO’s intrinsic value resides in the planned construction of the alumina refinery. Alumina price is projected to rise to reflect a fundamental upward shift in long term demand curve.
Experts are predicting an international indexed pricing mechanism for alumina in the foreseeable future. Fast growing nations including China demand alumina to supply their growing manufacturing base.
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