A top executive at the Coega industrial zone has assured Rio Tinto its planned smelter is still viable, despite the mining company’s decision to delay the project due to an electricity crisis.
”We would like to reaffirm that the viability of an aluminium smelter at Coega has been proven and the Coega site has been made ready for its implementation,” Coega business development executive Khwezi Tiya said in a statement late on Thursday.
”While the smelter has a great developmental impact, there are many other projects which will come on stream while we will continue working hard with other parties to bring it to finality.”
Rio announced on Thursday it would delay the project at Coega, near Port Elizabeth, because of power shortages in South Africa, which has struggled to meet surging demand for electricity.
Rio inherited the project from Alcan, which agreed a 25-year power supply agreement in November 2006 with state-owned utility Eskom. Rio acquired Alcan last year.
Rio energy division chief executive officer Preston Chiaro told Reuters earlier this week that Rio had a contract for power supply with Eskom from the end of 2010.
”We don’t just need power, we need affordable power for an aluminium smelter. If Eskom decides to change in some way, then we will change in some way,” he said.
Eskom said in January that electricity intensive investment projects such as Rio’s aluminium smelter could be reviewed due to the country’s power shortage.
Aluminium smelters are among the biggest industrial consumers of electricity.
BHP Billiton, the country’s single largest power consumer, said on Wednesday it would halve aluminium output at one of its South African smelters because of power shortages.
South Africa declared the power crisis a national emergency in January after power failures darkened homes and shut down the mining industry for five days.
Eskom has insufficient capacity because of problems with coal supply and ailing power plants.
The utility said on Thursday it planned to spend R1,3-trillion to increase its power generation capacity by 2025. – Reuters