Alcan blow for Coega
Patrick Cull POLITICAL EDITOR
CONSTRUCTION of the R21-billion aluminium smelter at Coega is to be delayed for possibly two or three years as a result of Eskom‘s inability to guarantee a reliable power supply to the project.
The smelter is the first “Eskom victim”, although Rio Tinto Alcan stressed yesterday that it remained “determined to continue with the project”, but would need to reconsider the time-frames.
The announcement brings an end to weeks of speculation about the future of the smelter as it became increasingly clear that it could not go ahead if Eskom was unable to guarantee a power supply.
The company said it was in discussions with the government on the timing of the smelter project and a team, consisting of members from the government, Rio Tinto and Eskom, were “reviewing the terms of the project to align its timing with the availability of secure power generation from Eskom.
“We are committed to working closely with the government to assist in mitigating the current energy crisis, while maintaining the option for future long-term development of the Port Elizabeth region,” said Dick Evans, chief executive of Rio Tinto Alcan and a member of the Rio Tinto board. “Rio Tinto has operated successfully in South Africa for several decades and we look forward to continuing our mutually beneficial presence in the future.”
Rio Tinto Alcan said it would also work with the government to minimise the impact of a potential rescheduling on regional economic development.
Sandeep Biswas, Rio Tinto Alcan senior vice-president for business development, said: “We will continue working on our local community and social investment plans and remain committed to finding solutions that will lead to the development of this project. The objective is to preserve the feasibility of the project and its underlying benefits for both Rio Tinto and South Africa, having the long term picture in mind.”
The company said the project would move into an “interim phase pending the outcome of discussions on the timing of the project”.
This would mean some realignment of the resource contracts to bring them in line with the new time-frames and to avoid penalties.
The Coega Development Corporation said last night it did not want to “preempt the outcome of the deliberations of the task team”. It accepted that “such an initiative may be necessary given the challenges.
“We reaffirm our commitment to the project and are working hard to provide a solution to the challenge. Further, Coega remains the best location for investment.”