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        FOR IMME:D~ATf RELEASE




eWorldBank
 1818 H Street, N.W. 1 Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234


         BANK NEWS RELEASE NO. 79/50                                               March 8, 1979


                      WORLD BANK LENDS $98 MILLION FOR ALUMINUM PRODUCTION IN BRAZIL


                   The World Bank has approved a $98 million loan to help finance an
         aluminum smelter project in Brazil. The project will substantially increase
         the supply of locally produced aluminum and improve Brazil's balance of
         payments.

                   The project has a total cost estimated at $370. I million. It will
         be carried out by Valesul Aluminio S.A. (VALESUL). The VALESUL plant ~ill be
         located in the State of Rio de Janeiro, near the port of Sepetiba, and close
         to the large consumer centers of Rio de Janeiro and Sao Paulo.

                   The main shareholders of VALESUL are Companhia Vale do Rio Doce S.A.
         and Shell Brasil S.A., a subsidiary of Royal Dutch Shell (UK/Netherlands).



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         Reynolds International Inc., a subsidiary of Reynolds Metal lnc.,will provide
         the technology for the project. Reynolds International Inc. is also a
         shareholder of VALESUL.

                   At full production in early 1982, the project's output will reach
         86,500 tons per year and substitute imports with an estimated yearly value of
         $145 million. The project will also serve to develop the skilled management
         and manpower needed for Brazil's aluminum industry. Moreover, it will introduce
         to Brazil an advanced aluminum reduction technology.

                   With huge bauxite reserves and enormous hydroelectric potential,
         Brazil is particularly well endowed for the development of a large aluminum
         industry. Nevertheless, the local primary aluminum industry has not been able
         to satisfy the country's increasing demand for the product. Between 30% to 40%
         of total primary aluminum supply has been imported in the past.

                   VALESUL wi 11 exercise strict control over all aspects of environmental
         pollution. The plant has been designed in accordance with the highest environ-
         mental standards currently applied internationally in the aluminum industry.

                   The $98 million loan to VALESUL has the guarantee of the Federative
         Republic of Brazil. It has a term of 15 years, including three years of grace,
         with interest at 7% per annum. VALESUL will pay a 3% per annum guarantee fee
         to the government. This is the second World Bank loan for the aluminum industry
         in Brazil. In January 1968 the Bank made a $22 million loan to Companhia
         Mineira de Aluminio (ALCOMINAS) •


•        NOTE:       Money figures are expressed in U.S. dollar equivalents.
FORM NO. 1121
   (5-76)
                                   T EC HN I CAL         DA T A


       PROJECT:

       COUNTRY:
       TOTAL COST:
                                   VALESUL Aluminum

                                   Braz i 1

                                   $370.1 million
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      BANK FINANCING:              $98 million for a term of 15 years, including three years
                                   of grace, with interest at 7% per annum. VALESUL will
                                   pay a 3% per annum guarantee fee to the Government.

      OTHER FINANCING:             Long Term Debt:    Commercial banks, $90 million
                                                      Banco de Desenvolvimiento ~o Estado de
                                                       Rio de Janeiro, $34.1 million
                                   Equity:            Companhia Vale do Rio Doce, ~89.2 million
                                                      Shell Brasil S.A., $51.8 million
                                                      Reynolds International Inc., $6 mi 11 ion
                                                      Banco de Desenvolvimento do Estado de
                                                       Rio de Janeiro, $1 mjllion


      IMPLEMENTING ORGANIZACION:   Valesul Aluminio S.A. (VALESUL)
                                   Rua Melvin Jones 35 - 3£. Andar
                                   Rio de Janeiro, RJ, Brazil

     PROJECT DESCRIPTION:        The main components \,\'ill be: a carbon plant to provide        •
                                 anodes, a rectifying substation to supply direct current,
     a potline of electro~ytic cells for the reduction process, and a cast house to cast
     billets, slabs and ingots.


      PROCUREMENT:               Procurement of equipment to be financed by the Bank, with
                                 an estimated value of $90 million, will be through inter-
     national competitive bidding in accordance with Bank's guidelines. Some items, with
     a total value of $4 million and not exceeding $250,000 each, will be procured through
     international shopping. Brazilian suppliers will be allowed a preference margin of
     15% of the ClF price (or the import duty rate if lower). Civi 1 works and erection
     for the plant (other than the turn key green'mill) will be locally contracted.




     ECONOMIC RATE OF RETURN:      20.4%

     ESTIMATED COMPLETION DATE:    1981




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