The Chinese government has given its approval for Qingtongxia Aluminium Group – China's second largest aluminium producer – to invest in an alumina project in India, producing one million tonnes a year, Reuters reports, citing the company's president Huang He.

Qingtongxia has bought a 50% stake in India's Ashapura Minechem Ltd's project to build the alumina plant – the company's first investment in alumina. The venture will also mine bauxite in India. Smaller Chinese aluminium producer Sichuan Aostar Aluminum Co Ltd last year withdrew from Ashapura's project and transferred its stake to Qintongxia.

Huang adds that a thorough bauxite exploration study will begin soon and construction of the alumina plant will start within two years.

The venture will invest Yu5.05 billion (US$652 million) to build the alumina plant and capital investment will be Yu 1.51 billion.

Other local companies have been encouraged by the Chinese government to buy resources overseas.

Huang said a thorough bauxite exploration study would be starting soon and construction of the alumina plant would start within two years.

The equal-stake joint venture would invest a total of 5.05 billion yuan ($652 million) to build the alumina plant, he said. Capital investment would be 1.51 billion yuan.

Qingtongxia and the Indian partner would meet 2 or 3 Chinese and Indian banks this year for financing the project, Huang said.

Qingtongxia in 2006 produced 415,000 tonnes of primary aluminium and aims to churn out about 430,000 tonnes in 2007.

It also has a joint venture with Alcan Inc to operate another 150,000 t/y of aluminium capacity in Ningxia.