Aluminum Corp of China Ltd, the world's second-biggest alumina producer, is poised to make China's single largest investment in Australia as it seeks to ease shortages of materials used to make aircraft and car bodies.

The Chinese State-controlled company, known as Chalco, will submit a final bid by May to build a A$2.9 billion (US$2.2 billion) bauxite mine and refinery in Queensland, the State government said. The deposit has enough resources to produce aluminium for 2.5 million Boeing Co 747-400 aircraft.

Chinese companies including Chalco and CNOOC are scouring the world for raw materials because supplies can't meet the boom in demand for cars, homes and appliances in the world's fastest-growing economy. Chinese companies may invest as much as A$10 billion in Australia, which ranks among the world's top five producers of alumina, coal, bauxite and iron ore.

"China is industrializing and they have to source materials and power," Alfred Wong, who helps manage US$15 billion, including resources stocks at UOB Asset Management, said in Singapore.

Soaring Chinese demand has led to a 53 per cent rise in the price of alumina, a white powder used to make aluminium, in the past 12 months. Australia has 22 per cent of the world's proven reserves of bauxite, which is refined to make alumina, while China has only 2 per cent.

Shares of Chalco, which is 70 per cent owned by the Chinese Government and 8 per cent owned by Alcoa Inc, rose as much as 55 Hong Kong cents, or 6.8 per cent, to HK$8.70 on the Hong Kong Stock Exchange.

They traded at A$8.40 yesterday afternoon, taking their 12-month gain to 62 per cent.

Other Chinese investors in Australia include Sinosteel Corp and Beijing Shougang Co Sinosteel, China's second-largest iron ore trader, which last October signed an agreement to study the development of A$1.5 billion worth of iron ore projects in Western Australia with Midwest Corp.

Beijing Shougang, China's second-largest producer of construction steel, is paying A$120 million for a 50 per cent stake in Mt. Gibson Iron Ltd's A$715 million iron ore project.

If Chalco's proposal is accepted, it will be named "preferred developer" of the 650 million metric ton Aurukun bauxite deposit, Queensland Premier Peter Beattie said in a statement yesterday.

Source: China Daily