Rio and Chalco abandon bid for $20bn bauxite deposit in Australia

Rio Tinto (ASX, LON:RIO) and China's Chalco have pulled out of the bidding to mine the $20 billion Aurukun bauxite deposit on Cape York, Australia, leaving mining giant Glencore (LON:GLEN) and Australia Indigenous Resources —a joint venture between magnate John Benson and Hong Kong investors— in the race.

The move surprised investors, especially since Chalco had previously held the lease and was willing to develop the resource. However, the firm wanted to do so without a smelter, a requirement the Queensland government is now prioritizing when it comes to approve mining projects.

For the last 40 years, the northeast state authorities have pushed the development of Aurukun, reports The Australian and it will now evaluate the remaining bids.

Australia is the world’s top producer of bauxite, aluminum’s main component, followed by China, Brazil, India, and Guinea. According to a report released today by the World Bureau of Metal Statistics, global aluminum market was in surplus by 773,000 metric tons in the first seven months of the year, compared to a total excess of 506,000 tons in 2012.