Mining company Rio Tinto will review plans for a major aluminium investment in South Africa as the country continues to suffer from serious power shortages — the first sign that the current crisis could hit foreign investment, the Financial Times reported on Tuesday.
Dick Evans, head of Rio Tinto Alcan, Rio Tinto’s aluminium division, told the Times that his group will hold talks with the South African government about the security of future electricity supplies to the planned $2,7-billion Coega aluminium smelting complex.
Evans said that Rio Tinto will not begin to spend ”big money” unless ”we are absolutely convinced they can supply the electricity in the timeline we are working on”.
Rio Tinto hopes to start aluminium production at Coega, near Port Elizabeth, in 2011, but it is unclear if new power stations needed will come on line before 2013, the Financial Times said.
”If it goes ahead, the project would produce 720 000 tonnes of aluminium a year, making it one of the world’s biggest aluminium smelters,” the newspaper reported.
The project has been put on hold several times already because of uncertainty over electricity supplies.
Eskom has said the national power supply could be unreliable until 2013 when the first of three new plants come on stream, and South African analysts have warned that the power shortages could deter foreign investment in the country.
They could also hit existing mining and smelting operations, a key driver of the country’s economy.
Rival mining company BHP Billiton, which is poised to make a takeover bid for Rio Tinto, said last week that its Bayside and Hillside aluminium smelters in South Africa and its Mozal smelter in Mozambique, which depends on South Africa for power, were suffering from intermittent power failures. — Sapa