Gilbertson may save stalled Coega project

Posted On Monday, 04 April 2005 02:00 Published by eProp Commercial Property News
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VETERAN deal maker Brian Gilbertson emerged at the weekend as a potential white knight to save the $2,2bn Coega aluminium smelter project.

 

Property-Housing-ResidentialGilbertson (pictured right) is well placed to take over the stalled project, as he runs Russian aluminium group SUAL, which has both the resources and the technology to make a success of the Coega project.

The lead investor and technology supplier to the smelter project had been Pechiney of France, but a major spanner was thrown in the works when Pechiney was taken over by Alcan of Canada, which has so far failed to commit to Coega.

The planned smelter is seen as the anchor project for the Coega Industrial Development Zone (IDZ), which is dear to government because of high unemployment in the African National Congress’ Eastern Cape stronghold.

Gilbertson not only runs an aluminium company which could rescue the project, but he also has an intimate knowledge of the aluminium industry in SA, having headed BHP-Billiton, which was responsible for building smelters at Richards Bay, and for the Mozal smelters in Mozambique.

He said at the weekend that he had approached both Trade and Industry Minister Mandisi Mpahlwa and the Industrial Development Corporation (IDC) to discuss the possibilities at Coega.

SUAL is busy running a pilot plant to test new Russian aluminium technology, which Gilbertson believes will be as good as that of Pechiney.

"This will, without a doubt open possibilities and create new potential for the Russian aluminium industry," Gilbertson said last week.

When contacted at the weekend to ask whether SUAL would be interested in the Coega project, he replied: "The answer is yes. We have a new technology, which we think could match or exceed the best in the world.

"We also have production skills — SUAL has been producing aluminium for 50 years. We have the financing capacity and, in principle, if the project were attractive, we'd be prepared to look at it."

Gilbertson said that he had said as much to Mpahlwa when the two last met.

He said it would normally take three years from the time of signing up to a smelter project to the pouring of the first metal.

However, he observed that the Coega smelter project "would not start from nowhere" as a lot of preparatory work had been completed by Pechiney.

Gilbertson said that a major determinant for any aluminium smelter project was a cheap power supply, and he recalled that both the Hillside smelter at Richards Bay and the Mozal projects had been launched when power was abundant in SA.

He said that for the Coega smelter to go ahead, there would need to be a supply of electricity "on attractive terms".

"You also look for nonhostile tax treatment, but as the smelter would be sited in an industrial development zone it shouldn’t be an issue."

Energy is a major input in aluminium production, to the extent that aluminium production is seen by many as a way of converting SA coal into an exportabe product.

Eskom has undertaken to upgrade the grid supplying electricity to Port Elizabeth and Coega, and had agreed a favourable tariff structure for Pechiney.

Gilbertson said his preference would be to use new Russian technology for the Coega smelter, but failing that, if he agreed to the project, he would be prepared to consider Pechiney or Chinese GAMI technology.

He said that SUAL would seek other investors for the Coega smelter project, if it were to go ahead, and the involvement of the IDC "would be critical — as it was for Mozal".

There would also be an empowerment partner, and he said that Incwala resources — a South African empowerment group which was launched last year which he chairs — "would be ideal".

"It is a financially robust company and fully empowered," Gilbertson said.

Last modified on Thursday, 26 June 2014 14:32

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