Dubai, Sept. 18: Dubai Aluminium Company (Dubal) has signed a $3.6-billion joint venture agreement with Larsen & Toubro (L&T) for a bauxite mining-cum-alumina refinery and smelter project in Orissa.

Dubal will hold an equity stake of 74 per cent, with L&T holding the rest. The first phase of the upstream integration project comprises a 1.4-million-tonne alumina refinery, bauxite mining and development of related infrastructure, including a dedicated power plant, port facility and a township.

The project, likely to be commissioned in the second half of 2009, will ensure supply of around 1 million tonnes of alumina per year, the principal raw material needed for Dubal.

The financial closure will be achieved by 2006 and construction will begin in 2007.

The second phase of the project will add a capacity to produce another 1.45 million tonnes per annum. It will see the construction of an aluminium smelter with Dubal’s technology. This phase is expected to cost around $2.5 billion, taking the total investment to an estimated $3.6 billion.

The project has been approved by the deputy ruler of Dubai, UAE minister for finance and industry and Dubal chairman Sheikh Hamdan Bin Rashid Al Maktoum.

“This agreement reflects the unique economic relationship between the UAE and India. This project is considered the West Asian country’s largest foreign investment in the industrial sector in India,” said Dubal vice-chairman Ahmed Humaid Al Tayer.

“The Orissa project forms part of our 10-year future plan, which involves securing long-term supplies of key raw materials. Dubal will benefit from this alliance through L&T’s technical expertise and the track record of the private sector conglomerate,” he said.