In another example of how power costs are impacting both the South African metals industry and the aluminum industry, Rio Alcan announced at an investor conference in London this week that they are postponing a major smelter project. Following South Africa’s power producer Eskom Holdings’ failure to guarantee power for the $2.7 billion Coega smelter, Alcan have decided to halt any further construction work and are redeploying engineers to projects elsewhere to make up the shortfall.
The Coega project was projected to produce 720,000 tonnes of aluminum when it came on stream, but following power reductions to the whole of South Africa’s metals industries, Eskom admitted the power crisis was likely to persist for at least another 4-5 years.
Alcan intends to fast track investment plans in Canada, Oman and Malaysia to make up for the shortfall. According to AM,M two Hydroelectric powered plants in Canada are scheduled to be upgraded by 2010, adding some 600,000 tonnes of capacity.
Alcan’s Coega project is the first of what will probably become many projects postponed or canceled in the face of the intractable power problems facing the South African metals industry.