South Africa’s Minister of Trade and Industry, Mandisi Mpahlwa, said on Tuesday the country’s support for a planned aluminium smelter at Coega by Rio Tinto remained unshaken despite a power shortage.
”I think as a country we cannot communicate a message that we are not suitable as an investment destination for the kinds of investments that require energy,” said Mphahlwa.
”So, our commitment to the Alcan smelter is unshaken,” he told a media briefing.
Alcan, which Rio Tinto acquired last year, agreed to a long-term power supply agreement in November 2006 with state owned utility Eskom.
Eskom said in January that electricity intensive investment projects such as the aluminium smelter could be reviewed due to the country’s power shortage.
Aluminium smelters are among the biggest industrial consumers of electricity.
Rio said last month it was progressing with plans for the smelter despite the country’s power crisis.
The mining group was in regular dialogue with Eskom, and the project was going ahead on schedule, Rio Tinto’s spokesperson in London, Nick Cobban, said at the time.
The project, due to produce 720 000 tonnes of aluminium a year, will go to the Rio Tinto board around mid-2008 for final approval, he added.
The South African government declared the power crisis a national emergency last month due to the rolling power cuts that darkened homes and shut down the mining industry for five days in January.
Eskom is grappling with insufficient capacity owing to problems with coal supply for power plants and broken down power plants at a time when other electricity generating plants are on summer maintenance.
The government has come under fire for ignoring repeated warnings from experts in recent years that major investments in new plants were needed so power supply could keep up with demand in a booming economy.
Eskom plans to spend R300-billion in power generation over the next five years, but it has warned that electricity troubles would continue until new plants are in operation. – Reuters