Aluminum Corp. of China Ltd. (601600.SH), or Chalco, and Australia's Queensland state government said Friday the Chinese group is committed to completing a feasibility study for a planned alumina refinery at Bowen this year.

However, analysts said the depressed market conditions for alumina mean it will be years before the plant is actually built, if ever.

Chalco had previously approached the government with a proposal to abandon the construction of the plant, and to instead process material from its planned Aurukun bauxite mine at Rio Tinto Ltd.'s (RTP) Yarwun refinery.

Chalco's parent, Aluminum Corp. of China, or Chinalco, had been set to take up to a 50% stake in Yarwun as part of its planned US$19.5 billion alliance with Rio, and also had the option to fund a share of an expansion of the refinery currently underway.

Rio's decision to walk away from that deal means Chalco no longer has access to Yarwun.

A spokesman for Queensland's Department of Infrastructure and Planning said the government now expects Chalco to proceed with its plans for a study of the Bowen smelter.

"Chalco has confirmed that its priority is to complete the feasibility study for both the mine and refinery at Bowen later this year," he said.

"The company will then be able to inform the Queensland Government of their conclusions."

A Chinalco spokesman also said Chalco was pressing on with its feasibility study, but declined to comment on its previous proposal to the government for the Bowen refinery to be abandoned.

"Chalco is committed to honoring its undertaking to the Queensland Government to complete the feasibility study into the establishment of a bauxite project at Aurukun," she said.

"The feasibility study is thorough and on schedule, and no investment decision will be made until it has been completed."

One analyst who did not want to be named, said that while the focus for Chalco was now back on a refinery at Bowen, market conditions meant construction is unlikely to begin any time soon.

Established alumina producers are shutting in capacity and Rio Tinto said earlier this year that about 70% of the global alumina industry was operating at a loss, so Chalco will not be hurrying to spend money on an expensive greenfield refinery.

Despite the acrimony over the failure of Rio's alliance with Chinalco, both parties have said they remain open to cooperation in the future, and one analyst said they could yet come to an agreement in Queensland in the future when tensions had eased and market conditions had improved.

Once Rio exhausts its Weipa bauxite mine in Queensland it plans to move south to the Embley deposit, which borders Chalco's planned Aurukun mine and the pair were discussing potential benefits of cooperating there well before the US$19.5 billion alliance deal was proposed.

"Rio and Chinalco have been talking together for so long that they both have a good idea what they want to get out of any commercial relationship," the analyst said.

"I'd be surprised if Chinalco did anything that was contrary to their interest...I'm sure there is something there they can work out jointly."

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com