BEIJING, Feb 09, 2011 (Dow Jones Commodities News via Comtex) -- A public-private partnership has begun a project in Inner Mongolia to extract 200,000 metric tons of alumina a year from a residue created by burning coal, the regional government said in a statement Thursday.

Alumina, smelted to produce aluminum, is the refined form of bauxite, an ore that has drawn a surge of Chinese imports in recent years as rising numbers of domestic aluminum producers sought a stake in the market.

The project in the autonomous region, initiated by Datang International Power Generation Co. (601991.SH) and Beijing's Tsinghua University, is based on technology to extract alumina from fly ash.

The region has an output capacity of 100 million tons of aluminum-rich coal a year, which translates to 12 million tons of alumina a year, the Inner Mongolia Reform & Development Commission said.

Based on an estimate of the region's aluminum-containing-coal resources of 50 billion tons and potential fly ash reserves of 15 billion tons, the project could provide eight times China's current level of bauxite reserves, it said.

"If realized, the alumina extracted from fly ash can basically take the place of all China's imports of bauxite and alumina," it said.

China imported 30.1 million tons of bauxite last year, up 53% from 2009.