Alcan starts studies to expand Cameroon smelter

YAOUNDE, Dec 1- Canadian aluminium giant Alcan Inc.'s Cameroonian venture Alucam has started technical and economic studies to more than triple production at its Edea aluminium smelter, its general manager said on Friday.

In October 2005, Alcan signed a letter of intent with the Cameroonian government for the upgrade and expansion of their Alucam joint-venture and the construction of a new hydroelectric power station. Alcan and the government each own 46.7 percent of Alucam.

The letter of intent allowed the company a two year period to conduct tests on the quality, quantity and accessibility of deposits of bauxite, the raw material for aluminium.

"The expansion of the Edea factory, which will raise production from 90,000 to 300,000 tonnes per year, is the option chosen by Alucam as the most favourable to maintain and reinforce industrial activities in the whole region," Alucam General Manager Raphael Titi Manyaka said in a statement.

The smelter will be increased through upgrades to the existing potline and the construction of a second potline. It would represent a boost of approximately two percent to Alcan's annual capacity of almost 3.5 million tonnes.

The smelter's expansion combined with the hydroelectricity development on the Sanaga River will require some 675 billion CFA francs ($1.37 billion), 30 percent of which will be direct investment in Cameroon, Titi Manyaka noted.

"Alucam hopes to set up economic activities that will contribute to sustainable development for the entire region," he said, adding that local people would be employed in the construction and running of the project.

An environmental impact assessment is on-going in order to evaluate the effect on the natural and human environment. Public consultations will run from December 6 to 20.

Alcan and the Cameroonian government agreed on a set of conditions in order for this project to be realized. If they are met and the findings of the various studies are positive, Alcan and Cameroon could proceed with the expansion of Alucam.

The feasibility of the project will require the construction of the Lom Pangar dam by the government, which would provide electricity for the project and the Cameroonian grid.

Alcan is also considering a $2 billion-plus plan to build a new aluminium smelter in South Africa.