The government and the Coega Development Corporation have welcomed as “highly positive” an announcement by Alcan Incorporated yesterday that it had decided to conduct a new feasibility study for the construction of a proposed multi-billion rand aluminium smelter at Coega.

In the announcement made in Montreal, Canada, Cynthia Carroll, president and chief executive officer of Alcan's primary metal group, said the further feasibility study would be conducted in line with new technologies the group intended to use in aluminium production.

And she said the new study was scheduled to be completed by the second quarter of 2005 – meaning no real change in Alcan’s original time frames for the construction of the smelter, as originally indicated in July.

“If the project receives the go- ahead, construction could possibly start as early as the end of 2005 with the first metal produced in 2008.

“The Coega IDZ and new port facility are intended to be a focal point for future foreign investment,” said Carroll.
CDC chief executive officer Pepi Silinga yesterday described Alcan’s announcement as “extremely positive”.

“It is also understandable that in the light of their intention to utilise more modern and highly efficient smelter technologies, they should want to conduct a new feasibility study,” said Silinga.

“The step does not only make business sense from a proper planning point of view, but it is also compliant with the law.”

Silinga said Alcan’s careful and focused approach to its intended investment at the location was also proving to be a “blessing in disguise” because “at this stage, we have made so much progress in basic infrastructure construction that we are way ahead of schedule”.

He added: “With Pechiney (the previous proponent of the aluminium smelter) we had to give certain undertakings that certain infrastructure would be delivered in time for their needs.

“This time around, Alcan will only have to move in.”

Trade and Industry Minister Mandisi Mpahlwa said he was pleased with the progress being made on the proposed project thus far.

Eastern Cape Economic Affairs MEC Andre de Wet also welcomed the announcement as “good news” last night.

“I hope they embark on that study very quickly and get to a stage where they start giving us further positive news,” said De Wet.

Making the announcement, Carroll said Alcan’s focus with the Coega project would be on the use of new AP30 or AP35 smelting technologies. The basic objective, she said, was to examine the best value-creating alternatives offered by the Coega aluminum smelter project.

Pechiney of France had based its own feasibility studies on the use of AP50 technology.

Alcan took over Pechiney’s business last December, and has since restructured the group’s operations, with several being disposed of.

Carroll said the basic implications of the new study were that the scale of the project might need to be reconfigured, in terms of the site, possibly the amount of energy to be used, as well as related matters, including establishment costs.

She said the venture would be undertaken jointly with the South African government and the Industrial Development Corporation. According to Carroll, current projections were that the Coega Smelter Project would produce up to 660 kilotons of aluminium each year.

Alcan’s announcement, meanwhile, coincided with confirmation that installation of bulk electrical supply infrastructure for the Coega IDZ was about to be completed.

Putting together the energy infrastructure – with a contract worth R180 million – is Alstom SA.

The process has involved major adjustment on the Coega main switching sub-station which will ultimately supply power to the IDZ directly from Eskom.

A total of 20 11-kilovolt indoor interconnection sub-stations for distribution of power into the various industrial clusters in the IDZ will be linked by 32 kilometres of cable.