Pechiney's $260 Mln Venezuela Contract Seen Signed Nov 30

Updated: Tuesday, November 14, 2000 09:59 AM ET

CARACAS (Dow Jones)--French aluminum producer Pechiney SA will likely sign a contract on Nov. 30 for a $260 million investment in Venezuela's state-owned bauxite mining operation Bauxilum, the secretary general of the local operation's holding company said Tuesday.

"I'm sure we'll sign the contract at the end of this month. We are still negotiating but are about 75% agreed," Pedro Acosta told Dow Jones Newswires.

Pechiney will be expected to invest in technological upgrades to Bauxilum's operation in exchange for a long-term raw material supply agreement but will not have an equity stake in the local company, which is a unit of state-owned mining and heavy industry firm Corporacion Venezolana de Guayana.

The French company should begin the process of increasing to 2.2 million tons from the current 1.7 million tons of annual alumina production capacity at Bauxilum by January next year.

Alumina, or aluminum oxide, is the raw material used in aluminum production.

Venezuela selected Pechiney from a field of bidders that included Britain's Billiton, US-based Alcoa and Consorcio ITM, an international group including Kaiser Aluminum Corp. and construction giant Flour Daniel.

Venezuela is hoping private investment will rejuvenate its paralyzed mining sector and spark growth in its non-petroleum economy.

A new constitution last December opened Venezuela's aluminum industry, among others, opened to private capital.