MONTREAL - Rio Tinto Alcan announced plans Tuesday to spend more than US$1 billion in Canada to propel construction of two key projects in Saguenay, Quebec and Kitimat, B.C.

The Montreal-based aluminum division of global mining giant Rio Tinto said US$758 million will be earmarked to complete the first phase of its AP60 technology pilot plant in Quebec.

It will also spend US$300 million for further construction in preparation for the US$2.5 billion modernization of the Kitimat smelter in British Columbia.

Both projects had been slowed down a couple of years ago because of the global recession, which hurt aluminum demand and prices.

"The first phase of the AP60 plant, which will become the platform for future generations of our AP series, underlines Rio Tinto Alcan's position as the world leader in aluminium smelting technologies," stated Rio Tinto Alcan CEO Jacynthe Cote.

The AP technology developed in France has evolved to 600 kilo amperes (electrical current), a 100 kilo ampere improvement from the AP50 technology.

Cote said the technology is the most cost-effective, energy-efficient, and environmentally friendly smelting technology commercially available.

It will improve productivity by 40 per cent.

The first phase of the AP60 plant will have 38 pots and an annual production capacity of 60,000 tonnes of aluminium by 2013. The initial work will include infrastructure required for the subsequent phases, which would bring the total production capacity to 460,000 tonnes.

The company broke ground on the Quebec facility earlier this year and had previously received approval to spend $429 million.

When the first phase of the plant becomes operations, the Arvida Research and Development Centre will lead ongoing activities towards commercializing the AP60 technology.

It will also be supported by research and development teams in Voreppe and Saint-Jean-de-Maurienne, France.

The miner had already agreed to spend $578 million preparing its Kitimat smelter for an upgrade using its proprietary AP technology.

It shut down two pot lines to make way for the construction of a new building related to the modernization project.

The Kitimat modernization project will increase the smelter's current production capacity by more than 48 per cent to approximately 420,000 tonnes per year. The smelter will be powered exclusively by hydroelectricity and use Rio Tinto Alcan's proprietary AP technology to reduce its emissions intensity by more than 50 per cent per year.

"The modernization of our Kitimat smelter is truly a transformational project, in line with our strategic objective to grow via long-life, large-scale, low-cost assets. Once completed, Kitimat will be one of the lowest-cost smelters in the world," Cote added.

The projects are among $6 billion of investments planned in Canada by Rio Tinto.

Rio Tinto said its continued investment in these projects is consistent with the modernization strategy set out following the acquisition of Alcan in 2007 and is "in-keeping" with its commitments to the governments of Quebec and Canada.

The funding announced Tuesday raises total Rio Tinto capital projects announced this year to US$6.5 billion. The company said it plans to spend US$13 billion by the end of 2011.

Cote said in October that the company was cautiously watching the global economy and inventory levels ahead of giving the projects the green light.

Tuesday's announcement comes a day after Rio Tinto's chief financial officer signalled the miner's intention to embark on the first substantial capital spending on Alcan since its acquisition.

Guy Elliott also told Australian media that the company was planning a second wave of Alcan asset sales, this time involving smelters and refineries, to help turn around the aluminum business.

Alcan lost US$578 million last year after earning a US$1.3 billion profit in 2008. During the first half of the year, the division earned US$358 million.

Alcan has more than 20 smelters and five refineries around the world. Elliott didn't mention which assets might be sold or whether any are located in Canada.

Rio Tinto Alcan's operations in Canada are generally cheaper to operate than other plants, due in part to cheap hydro power.

Nearly two years ago, the company announced the closure of its Beauharnois smelter near Montreal and reduced output at the Vaudreuil alumina refinery in the Saguenay region, affecting 300 jobs in Quebec.

The asset sales would be part of a strategy that would also focus on cutting costs, getting more out of existing assets and investing in new assets.

Rio Tinto Alcan forecasts that global demand will nearly double over the next decade and grow at an average rate of four to five per cent over 20 years, largely the result of growing demand from China and emerging countries.

Rio Tinto is one of the world's largest miners with operations spanning the globe. It produces aluminium, copper, diamonds, coal, uranium, gold, industrial minerals and iron ore.