A $1.6-billion aluminium smelting plant that will be put up in Malaysia's Sarawak state by a partnership of two major Chinese and Malaysian groups will have a capacity of 370,000 tonnes a year.

The plant's operation is designed to coincide with a projected growth of 4 percent in the world demand for aluminium over the next five years, the project proponents said.

The announcement in Kuala Lumpur, however, did not say when the smelter plant will begin operations. It will be located at the Samalaju Industrial Park.

A joint venture agreement for the project was signed Thursday between Aluminium Corporation of China and a Malaysian group headed by local tycoon Tan Sri Syed Mokhtar Al-Bukhary and United Arab Emirates-based business leader Mohammed Ali Rasheed Alabbar.

The agreement, which provides for the establishment of Smelter Asia Sdn. Bhd. for the development and operation of the plant, was signed by Syed Mokhtar and Aluminium Corp. deputy GM Zhang Chengzhong.

The signing was one of the highlights of a visit to Malaysia by Chinese Premier Wen Jiabao. It was also witnessed by Malaysian Prime Minister Najib Razak.

The Samalaju Industrial Park where the Smelter Asia plant will rise is actually intended by the government to host heavy industries. The area is about 180 kilometers from the Bakun hydroelectric facility, a report in The Star said.

Mr Syed Mokhtar said in a statement after the signing that the "strategic collaboration" with the Chinese group is expected to bring in high class technology and to contribute to the socio-economic growth of Sarawak state.

On the other hand, Mr Alabbar, the joint venture group's UAE-based partner, said the plant would not only benefit the country but also "support the ASEAN region's development thrust by providing aluminium, which is critical in driving the massive infrastructure projects that are being planned."

For his part, Mr Zhang of Aluminium Corp. described the signing of the joint venture agreement as a "significant milestone" that he sees would be "an indispensable driving force that dramatically stimulates Sarawak's economic growth," the Star report said.