FRENCH ALUMINIUM giant Pechiney has given the go-ahead to state electricity utility Eskom to start work on R2-billion upgrade to electricity supplies to the Eastern Cape. This approval has come while Canadian aluminium company Alcan is in the process of purchasing a controlling share of Pechiney. South African minister of Public Enterprises, Jeff Radebe, expressed delight at the announcement of Pechiney's intention to proceed with the Coega aluminium smelter in the Eastern Cape. "Pechiney informed us earlier today of their intention to tell Eskom to begin construction of the power supply network for the aluminium smelter. Their intention signals growing international confidence in the strength of the South African economy. Indeed, it is also an important message to the people of the Eastern Cape that they are capable of making such a gigantic project a success. Not only does the project provide a shot in the arm for employment initiatives in the region, it also boosts the Ngqura Port Project," Radebe said. Aluminium Pechiney's go-ahead to commence with the construction of the network to supply power to the proposed smelter project is in term of the long term power supply contract between Eskom and Pechiney that was signed in December 2002. The power supply network is a critical element of the start-up phase of the smelter project. Radebe said that "although the Coega aluminium smelter is expected to use more electricity than the entire Eastern Cape put together when it is at full production, Eskom has indicated that no changes will be made to it's rural and domestic electricity rollout commitments in the Eastern Cape." Eskom will invest more than R2 billion in infrastructure. The investment in electricity supply consists of new electrical substations and the construction of approximately 1000 km of new high voltage transmission lines. The construction period will last just over two years. The Coega development, including the Coega aluminium smelter project, is one of the government's high priority projects, with the potential to bring about significant economic benefits to the Eastern Cape region, create employment, energise industrial development and promote international trade. Up to 6000 jobs will be created during the construction phase of the project, with a total of R3,5 billion spent on locally manufactured goods and services. Furthermore, the project will also create thousands more jobs through downstream activities. Export earnings are estimated to be between R5 billion and R6 billion when the smelter is fully operational. Given the critical role of electricity in the production of aluminium, the Eskom electricity supply offer played a key role in South Africa's bid to secure the smelter for the Eastern Cape. Earlier this year, the Boards of both Eskom and IDC each approved a 12,5 per cent equity investment in the proposed Eastern Cape aluminium smelter thus securing a total of 25 per cent equity investment in the project. The decision of both the Eskom and IDC Boards signalled government's commitment to this multi-billion dollar smelter project. Eskom says in a statement that it is confident that it will deliver the project on time and be able to meet all the requirements of this mega-project.