BHP May Build $3 Billion Congo Aluminum Smelter

Oct. 22 -- BHP Billiton Ltd., the world's biggest mining company, is considering a $3 billion plan to build its largest aluminum smelter in the Democratic Republic of Congo. The plant would use about 2,000 megawatts of power from the proposed Inga 3 hydropower project and would produce 800,000 metric tons of metal a year, the Melbourne-based company said in an e-mailed statement today. The smelter would be BHP's first aluminum project since it expanded a Mozambican plant in 2003. The investment would be the biggest in the central African country, which is attracting interest because of its mineral reserves and democratic elections in 2006, the first in 40 years. Congo suffered two civil wars between 1996 and 2003, which left an estimated 4 million people dead. "This is saying that you can get cheap power but you have to up the risk profile," Paul McTaggart, an analyst at HSBC Holdings Plc in London, said in an interview. "BHP can handle it because they are big enough." The Inga complex lies on the Congo river, the biggest in the world by volume after the Amazon. If fully developed, Inga has the potential to produce 40,000 megawatts of power. The investment would be a venture with the Congolese government and BHP will fund a study into the development of Inga 3. Inga 1 and 2 produce about 1,400 megawatts and Inga 3 could generate 3,000 megawatts, the World Bank said in March last year. The smelter would be built in the western Bas Congo province near Kinshasa. Most of the fighting took place in the east of the country, which is the size of Western Europe. 'Cheap Electricity' "This is definitely a vote of confidence in the country's stability," Reg Rumney, an independent investment analyst, said in an interview from Johannesburg. "If BHP can get cheap electricity from Inga, it'll be a big advantage for them." The agreement was signed today by the Congolese Energy Minister Salomon Banamuhere, Maphai and Xolani Mkhwanazi, the head of BHP's southern African aluminum business. "It's of very great importance for Congo," Victor Kasongo, the country's deputy mines minister, said today in an interview from the capital, Kinshasa. "It's a huge project. We hope as well that others will follow this example." BHP currently operates two aluminum smelters in Richards Bay, South Africa, and one in Maputo, Mozambique. They have a combined production capacity of about 1.5 million tons a year of aluminum and use 2,150 megawatts. Alumina for the plant may come from Guinea, also on the West African coast. BHP is exploring in Guinea for bauxite, the raw material used to make alumina, and it's building an alumina refinery with Global Alumina Corp., Bronwyn Wilkinson, a company spokeswoman, said in an interview from Kinshasa. Alumina is used to make aluminum. BHP fell 71 pence, or 3.9 percent, to close at 1,764 pence in London.