Mubadala will also help 1Malaysia Development team up with other strategic partners to develop downstream industries including a rolling mill, a wire cabling plant, a wheel casting plant and up to 10 extrusion plants costing an additional $1.8bn.

The agreement to build the smelter in Sarawak, on the island of Borneo, is still preliminary and its execution will hinge on regulatory approvals and an agreement on the price of electric power, among other things. It will have a capacity of 750kt/y, according to the initial plan

"All this is a strong signal of Abu Dhabi's confidence in Malaysia as a growth enabler. It opens the way for more investment from the Middle East pouring into Malaysia," the Malaysian Prime Minister Najib Razak said.

The new facilities will be in the Sarawak Corridor of Renewable Energy, a focus of Malaysia's energy development strategy. The projects are expected to create 10000 jobs during construction and 2000 specialist jobs on completion.

The agrement was signed during a weekend visit to Malaysia by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.

Sheikh Mohammed is also chairman of Mubadala, Abu Dhabi's primary vehicle for diversifying the economy away from hydrocarbons.