By Bianca Capazorio Business Correspondent
IN a landmark move towards kick-starting construction at the $2,7-billion (R19-billion) Alcan smelter at Coega outside Port Elizabeth, the company yesterday announced that it had signed a R700-million deal with three firms for the plant‘s engineering design.
The three companies contracted are Canadian engineering firm SNC-Lavalin, mining and metallurgy engineers Hatch, as well as South African firm Murray and Roberts.
Murray and Roberts executive Caswell Makama said the signing of the agreement signified “the dream beginning to take shape”.
“We are going to see it taking shape, the organs are going to come in, then the heart and then the staff and it will all take shape,” he said.
The joint team will complete detailed engineering studies ahead of construction, which is set to start in mid-2008. The smelter is expected to come online in 2010.
The front-end engineering design is expected to take nine months to complete, and will provide firm cost estimates and a “critical path for construction”, the company said.
Hatch managing director Rory Kirk said the “multi, multi-billion rand project is one of the most significant metal projects South Africa has seen” as it would not only create jobs, but would elevate South Africa‘s “international industrial stature”.
SNC-Lavalin executive Patric Mercille said the project would “contribute greatly to the local economic development of the Eastern Cape and this beautiful country as a whole”.
Both SNC-Lavalin and Murray and Roberts have smelter experience, having worked on the Mozal one and two smelters in Mozambique and the Hillside smelter in Richards Bay.
The $100-million (R700-million) contract focuses on the first phase of the smelter, at which 360 000 tons of aluminium is expected to be processed a year.
The second phase will ramp production to 720 000 tons a year.
The construction of the smelter will create 5 000 jobs, and 1 000 permanent jobs will be created once the smelter is operational. A further 200 to 300 sub-contractors could also be employed once the smelter is up and running. Alcan currently employs 65 000 employees worldwide.
Alcan‘s chief executive for Coega, Brent Hegger, said: “Alcan looks forward to working with the joint venture partners as they each share Alcan‘s commitment to the environment, health and safety and to maximising the project‘s benefits for South Africa.
“Together the partners have demonstrated this commitment by setting the target of zero lost time accidents (major accidents that result in lost time) during the construction.”
Updating the media on the progress made with the smelter so far, Hegger said the executive team was “essentially complete”. Hiring of local personnel had already started, with some preliminary jobs already advertised.
Alcan has also secured office space for their South African operations in Johannesburg and the company was looking at expanding their space in Port Elizabeth, he said.
Economist Neal Bruton said the deal was another milestone in the ongoing growth for the Eastern Cape economy.
“It is an extremely important development with far reaching, positive implications for growth in the Eastern Cape,” said Burton.
Coega Development Corporation chief executive Pepi Silinga said he was excited about the deal, which was confirmation that the construction of the Alcan smelter was on track.
“We‘ve always maintained that the investment is on track, and we are happy Alcan is meeting its target in progressing the investment.
“The Alcan investment is the biggest green field project (a project started from scratch) in South Africa, and it remains unchallenged,” he said.
Port Elizabeth Chamber of Commerce and Industry chief executive Odwa Mtati said he commended the use of local company Murray and Roberts and described the deal as a “further cap for the city”.
“The usage of a local company is hopefully going to be extended to the usage of locals and opening of employment.
“Alcan will bring international flavour and skills,” he said. – additional reporting by Dineo Matomela
capazoriob@johncom.co.za