Friday, October 16, 2009

Rio Tinto Alcan shelves S.African smelter

Environmentalists are usually anti-development. Period. Since Rio Tinto Alcan pulled out of the aluminium smelter project at Coega they will have you believe we can all sleep better tonight after the project was put on ice. After all, aluminium smelters produce fluoride products that are harmful to the environment. So did Eskom save the day with their incompetence? I guess we'll never know.

JOHANNESBURG — Mining giant Rio Tinto Alcan has shelved a 2.7-billion-dollar (1.8-billion-euro) smelter project in South Africa in the face of electricity supply and pricing concerns, a spokesman for Rio Tinto Africa said on Friday.

The action followed a move by South Africa's government and energy supplier Eskom to terminate an energy supply deal for the 720,000-ton aluminium shelter planned for Coega in the Eastern Cape province.

"We have all recognised that the supply of power and price has changed significantly. We will start discussions to review the project in the light of these changes," said Rio Tinto Africa spokesman Jean Chawapiwa-Pama.

Alcan Inc, later Rio Tinto Alcan, entered an electricity supply agreement with Eskom in 2006 ahead of a wave of power blackouts in early 2008 that shut down key industries.

To finance new infrastructure, the ailing energy giant this week pushed for a 45 percent annual tariff rise over three years after introducing two tariff hikes that average 59 percent since last year.

"We fully understand that conditions surrounding the availability and forward pricing of power in South Africa have shifted significantly in the last two years," said Guy Larin, vice president of the mining house's business development in Africa in a statement late on Thursday.

Rio Tinto Alcan and South Africa's Industrial Development Corporation had invested some 130 million dollars in the project since 2006, with construction originally scheduled to start last September.

Larin said attractive conditions for the project remained in place but a long-term, competitive power supply agreement was essential and would have to be renegotiated.

"We remain ready to assist South Africa in realising the considerable benefits of a smelter project in the Port Elizabeth area," he said.

2 Opinion(s):

Anonymous said...

Forget about the natural environment for a minute and consider this:
The RT Smelter at Richards Bay uses 40% of the electricity produced b Eskom... can you imagine how little electricity thee would've been for Private Residences and Businesses, not to mention schools and hospitals, had a second smelter been built???

FishEagle said...

Anon, I work in an environmental field and the state of the environment will always concern me. However, the point you made highlighted the problem of goverment's inability to make the basic calculations when they do their planning prior to implementation. Oh hang on, what planning?!!!!

PS. 40%? Have you got a source for that figure?