Alcan awards engineering design contract for COEGA smelter project

Canadian producer Alcan announced that it has signed a contract worth more than US$100 million with a joint venture consisting of SNC-Lavalin, Hatch, and Murray & Roberts for the front-end engineering design (FEED) and management of the first phase of the proposed COEGA aluminium smelter. The first phase will have a capacity of 360,000tpy. The FEED is expected to take nine months to complete and will provide firm cost estimates and a critical path for construction, pending the Notice to Proceed (NTP) from the COEGA Aluminium joint venture board. The second phase of the project, which would bring aluminum production to an estimated 720,000tpy is also currently in development. Phase I construction of the smelter is expected to begin in 2008 and is subject to the successful completion of the project's next steps and financial arrangements. Phase I is scheduled to come on line in 2010. South African power supplier Eskom signed a long-term deal for the COEGA project last year and will take a 15% stake. An additional 5% stake has been reserved for Broad Based Black Economic Empowerment (BBBEE) partners. Alcan said it is also in discussions with additional potential partners.