Smelter could be delayed by 4 years

Posted On Monday, 14 April 2008 02:00 Published by eProp Commercial Property News
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The R21-billion Rio Tinto Alcan aluminium smelter, which was scheduled to break ground at Coega in the second half of this year, could be delayed by as much as four years due to the area‘s current power shortages.

 

EskomSpeaking from Montreal, the chief executive of Rio Tinto‘s aluminium business, Dick Evans, announced that a number of workers, who were scheduled to begin work on the project, and who had already moved to Port Elizabeth, had been re-allocated to other smelting projects in Canada and Saudi Arabia.

Evans said Rio Tinto was in discussions with Eskom and the South African government to find an amicable solution.

“We‘ve gone to them and offered to defer the project as opposed to taking a legalistic approach,” Evans said.

“We think it‘s in our long- term interest to work with the government to make sure the power is fully there and we are not competing with residential use at the point when we start up a smelter.”

The smelter‘s construction was first proposed in 2002 when the French aluminium giant Pechiney showed an interest in Coega as a potential site for a new plant. At the time, they were planning to build the new smelter by 2005.

The project was initially delayed when the Canadian aluminium group, Alcan, took over Pechiney, and was again brought into question during frantic take-over bids for Alcan last year.

Rio Tinto was eventually the successful bidder and assured that the Coega project would continue, stating they hoped to have the smelter fully operational by 2011.

Alcan has already spent R700-million on the plant‘s engineering design, which will be presented to the Rio Tinto board in July for final approval.

The new delays would mean groundbreaking will only take place in 2012 and the plant will most likely be operational by 2015.

Port Elizabeth Regional Chamber of Commerce and Industry‘s chief executive Odwa Mtati said the fact that Rio Tinto Alcan had not withdrawn was “a ray of hope”.

“Yes, it is disappointing in the short term, as there are many positive spin-offs that would have benefited the region, such as job creation and downstream activities, but these have only been delayed and not lost,” he said.

Mtati said Coega was a 50- year greenfields project and the delay needed to be seen from that perspective.

He said the fact that the project was delayed due to Eskom‘s inability to supply sufficient electricity could hamper investor confidence, but said this was indicative of energy supply problems throughout the country.

Last modified on Wednesday, 25 June 2014 10:36

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