THE COEGA DEVELOPMENT Corporation (CDC) has welcomed the signing of the port development and services contract between the developer of the deepwater Port of Ngqura, the National Ports Authority (NPA), and French aluminium company, Pechiney. The signing of the contract brings the aluminium giant's plans to build a $2billion smelter in the Coega Industrial Development Zone (IDZ) a step closer, says the CDC. The agreement follows one signed by Pechiney and electricity utility, Eskom in 2002. "More encouraging and exciting is also the fact that Pechiney has found South African partners who have bought a 25 per cent equity in the smelter project. We are confident that they will find other partners and raise the necessary debt finance easily," says CDC media spokesperson, Vuyelwa Vika. The new smelter at Coega will use Pechiney's latest AP50 technology, which allows lower capital expenditure, shorter construction time, fewer emissions and more productivity than earlier generations of primary aluminium smelters. The only outstanding issues before the smelter project can go ahead are the raising of finance and an agreement with the CDC. Pechiney will fund 45 per cent of the project with South African electricity giant, Eskom and the Industrial Development Corporation (IDC) taking a combined 25 per cent stake. The raising of equity and debt finance will begin in about two months' time. The construction of the smelter is expected to commence towards the last quarter of the year. According to research undertaken by the Council for Scientific and Industrial Research (CSIR), the operation of the Pechiney smelter will generate an increased income of about $26-million (R230-million) a year to the Port Elizabeth area. On a national scale, over the construction period the aluminium smelter will result in additional income of between $184-million (R1,6billion) and $267-million (R2,4-billion). As a result of this investment and downstream economic activity, between 36 541 and 57 553 direct, indirect and induced jobs will be affected, either in the form of existing jobs that are sustained or as new jobs that have been created. Once it is operating, the Pechiney investment will create 9 814 indirect jobs nationally. "Of these jobs, at least 36 per cent will be created in the Nelson Mandela Metro and the remainder elsewhere in South Africa - mostly in the electricity sector," says Vika. The signing ceremony was attended by the Minister of Public Enterprise, Jeff Radebe, who signed on behalf of the South African government, while Pechiney's chief operating officer, Jean-Dominique Senard, signed for the French Aluminium Pechiney. A report by merchant banker, JP Morgan, indicates that demand for aluminium is expected to reach a record 22.4m tons - at least 2.73m tons above last year's demand - by 2005.