23 May 2007
Canadian aluminium company Alcan has given its strongest indication yet that it will build the proposed US$2.7-billion smelter in the Coega industrial development zone outside Port Elizabeth by selecting an executive to oversee the project.
According to Business Report, Alcan has already selected a chief executive officer and has advertised for a number of other key posts as it prepares to construct the aluminium smelter in South Africa.
Alcan spokesperson Robert Valdmanis told Business Report this week that the group would announce the appointment of the chief executive “within the month,” adding that he or she was a “person of international quality who knows South Africa well”.
In a reassuring sign, Valdmanis also told Business Report that American-based Alcoa’s bid to take Alcan over would have no impact on the firm’s plans for Coega. “We are moving forward . we are definitely committed to the project,” Valdmanis said.
He also told the paper that Alcan had narrowed the companies bidding for the Coega engineering study down to two, with the winner to be announced by the middle of the year.
According to Business Report, the engineering study for Alcan’s smelter is expected to be complete by mid-2008, with construction starting later in the year and the first metal being rolled out by 2010.
Alcan signed a 25-year power supply contract with state-owned electricity company Eskom in November 2006. The smelter project will be the first to benefit from a development electricity pricing programme specifically designed to attract major industrial investors to South Africa.
Speaking at the time of the signing, Alcan’s Hal Spencer said the Coega smelter was likely to reach production levels of 720 000 tons of aluminium a year by 2014, making it one of the largest in the world.
The project is expected to create about 6 000 new jobs in the construction phase and 1 000 jobs once the smelter starts operating.
The South African government has spent in the region of R7.5-billion developing the industrial development zone and deepwater port at Coega, making it the single biggest infrastructure project in the country’s history.
Alcan, as an anchor tenant for the zone, will be making a substantial contribution to the smelter: the company wants to retain between 25% and 40% of the equity of the project and seek partners for the balance.
State-owned finance institution the Industrial Development Corporation (IDC) will also inject a huge amount of capital into the project, reportedly through taking up a 15% stake in the smelter, as well as providing up to $100-million in debt finance.