Interfax reported that Aricom plc, an Anglo Russian mineral resources developer and Aluminum Corp of China will invest USD 300 million over three years in the construction of a plant to produce titanium sponge in Northern China which will source feedstock exclusively at Aricom's Kuranakh ilmenite mine in Russia.

Aricom said in a statement that the two companies had completed a feasibility study for the 15,000 tonnes per annum titanium sponge plant in Jiamusi City, Heilongjiang Province, located approximately 1,300 kilometer from the Kuranakh mine in Russia's Amur region. The plant will sell titanium sponge via Chinalco.

The feasibility study estimates that the project would yield a post tax Internal Rate of Return of 21% and a post tax Net Present Value of USD 130 million. Further to the feasibility study, Aricom and Chinalco are studying the possibility to further expand the production capacity to 30,000 tonnes per annum.

The total investment of USD 300 million over the first three years is expected to be funded on a 70:30 debt to equity ratio. The equity component of the capital expenditure will be paid according by the joint venture's proposed shareholders on the basis of 65% by Aricom and 35% by Chinalco. On this basis, Aricom's equity funding requirement would be USD 58 million which could be funded out of existing cash resources.