Pechiney expected to sign up this month.

Posted On Friday, 01 November 2002 10:01 Published by eProp Commercial Property News
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Port Elizabeth - The Coega Development Corporation (CDC) is expected to sign an agreement with Pechiney, the French resources giant, before the end of November.

Property-Housing-ResidentialThis will allow the construction of a state-of-the-art aluminium smelter in the Coega industrial development zone, 20km northeast of Port Elizabeth.

Graham Price, the CDC's business development manager who is responsible for finding tenants for the zone, said there were 'very few issues outstanding' with Pechiney. He would not elaborate because these were still being negotiated.

Gilles Regazzoni of Pechiney confirmed yesterday that it had been engaged in discussions to finalise these issues.

Although the French firm had always maintained that it would keep its options open about whether to invest in Coega or in Australia, Regazzoni said: 'Nothing has been concluded yet but we are seriously looking at Coega.'

Apart from the deal with the CDC, Pechiney must also reach agreement with Eskom for the enormous amount of power its smelter will require and with the National Ports Authority on the use of the facilities being built for the IDZ.

Tony Stott, Eskom's spokesperson, said Eskom was committed to the project and was doing an environmental impact assessment study on the site. More than R2 billion would be invested in electricity infrastructure.

The National Ports Authority, the landlord of all seven South African ports, has committed itself to the construction of a R2 billion deep-water port in the IDZ. Construction work is expected to start in a few weeks.

The earliest month during which work on the smelter could start was March, Price said.

If it goes ahead, the Pechiney smelter will be the most advanced in the world, producing 460 000 tons of aluminium a year. It will require a total investment of R2 billion, about R744 million of which will be made locally.

Total annual sales of $77 million are forecast, about 95 percent of which will be exported.

The aluminium smelter will create an average of 4500 jobs during construction and 1000 during operation.

Price said the CDC was also in discussions with Ferrostaal, which was looking at a precision strip mill and a refrigerated container construction plant at Coega as part of its obligations under the arms procurement offset programme.

He said that when big concerns such as Pechiney or Ferrostaal established themselves, service providers and downstream industries would be attracted.

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