Cape Town - South Africa is expecting a decision by the end of September on whether Canadian group Alcan will build a long-delayed aluminium smelter in the country, a cabinet minister said on Tuesday.

Alcan, the world's second biggest primary aluminium producer, has repeatedly put off a final decision on the $2.5bn project, raising doubt over whether it planned to go ahead with the Coega smelter, near the southern coast city of Port Elizabeth.

The company inherited plans for the 660 000 tonne smelter, the main development of the greenfields Coega port, when it took over French rival Pechiney in 2003.

"We should have a decision by the end of the month (September)," Public Enterprises Minister Alec Erwin told reporters in Cape Town.

"We are looking to conclude, one way or another the electricity contract, but it (the decision) will more likely be towards the end of the month," he said.

South Africa's government said last year it expected an answer from Alcan in January so as to allow for construction to begin early in 2006 with the first metal to be produced in late 2008.

Erwin said in May this year Alcan could face penalties should it pull out of the deal at this late stage.