Rio Tinto's Paraguay investment may reach $2.5 bln

ASUNCION Dec 14 (Reuters) - Rio Tinto Alcan, a unit of global mining giant, Rio Tinto (RIO.L), said on Monday it could invest up to $2.5 billion in a potential aluminum shelter in Paraguay.

On Monday, Rio Tinto Alcan said it had begun negotiations on a possible power purchase agreement for the potential smelter.

"Our projections indicate the total investment of the projection to be approximately $2.5 billion," Sandeep Biswas, the head of Rio Tinto Alcan's new business division, told reporters in Asuncion.

(Reporting by Mariel Cristaldo, Writing by Kevin Gray)