The Industrial Development Corporation (IDC) was confident that Alcan, the world's second-biggest aluminium producer, would go ahead with the construction of a $2 billion (R13.32 billion) aluminium smelter in Coega, Geoffrey Qhena, the IDC chief executive, said.

Alcan and Eskom were finalising talks on electricity tariffs, which was one of the major outstanding issues in the negotiations of the project, Qhena said at the presentation of the IDC's results.

"One of the major issues is electricity and it is being resolved. Alcan has put a lot of people in the project and had made numerous visits to the site, which makes us confident that it would go ahead with the project," Qhena said.

The IDC would acquire a 15 percent equity in the smelter project, which would be based just outside Port Elizabeth.

Eskom had given Alcan its proposed prices and was waiting for the Canadian-based company to make a decision, said Fani Zulu, the spokesperson of the power utility.

Eskom, which had wanted to take a 12.5 percent stake, would not have equity in the project, Zulu said.

Kelly Byrne, an executive manager for the metals unit at the Coega Development Corporation, the company that operates the Coega development zone, said Alcan was expected to make a decision at the end of next month or at the beginning of September.

Alcan inherited the project in 2003 when it took over French rival Pechiney, which had committed to building the smelter.

The IDC reported net attributable income of R1.1 billion in the nine months to March compared with R697 million in the 12 months to June last year.

The corporation had to report after nine months to align its year-end with the government's and other state-owned entities'.

Revenue dropped to R2.8 billion from R3.9 billion, while capital reserves increased from R24.5 billion to R29.8 billion.

Gert Gouws, the chief financial officer of the corporation, said the IDC had to cancel the establishment of a R10 billion black economic empowerment (BEE) fund because it was not popular with the financial institutions.

Banks preferred to co-invest in empowerment transactions with the development financier on a case-by-case basis, he said.

About nine months ago the IDC said it was talking to local and foreign financial institutions to establish an empowerment fund to provide specialised financing of BEE transactions.

Gouws said this was not a blow to the IDC's empowerment drive as the development financier would be able to mobilise more funds to finance BEE deals outside the fund.

"We [the IDC] have realised we don't need the fund, we would be able to do anything that we would have done in the fund and more," Gouws said.

Qhena said the IDC board had approved R2.5 billion to be invested in the pebble bed modular reactor, the project to develop nuclear power as an alternative source of energy. The IDC was also working on a business assistance strategy for its chemicals company, Foskor.