Port agreement is Alcan's big hurdle at Coega

Durban - Alcan, which plans to build a R20 billion aluminium smelter at the Coega industrial development zone, has a few more hurdles to clear before the project is set to go. "The last agreement is the port agreement, which we hope to finalise by the end of October," Brent Hegger, the chief executive of Coega Aluminium, said yesterday. The port agreement with Transnet National Ports Authority, which "is critical", would include leasing port sites for imports and exports, and determining the tariffs, said Hegger. Robert Valdmanis, Alcan's stakeholder manager, said the deal needed to be done quickly as "we have to finalise the shareholder agreement and this cannot be done until all the agreements are in place". Alcan will hold up to 80 percent in the smelter and the Industrial Development Corporation 15 percent, while the balance is earmarked for broad-based black economic empowerment shareholders. Alcan is also in talks with other potential shareholders. A special purpose vehicle was being set up with the department of trade and industry to facilitate the selection of black partners, Hegger said. Valdmanis said: "The government is advising us on the process … which we are still defining, but it will be completely transparent and public." It will begin early next year and be finalised in the second half. Yesterday Alcan signed a project support agreement with the Coega Development Corporation (CDC), which includes the sale of a 120ha site to Alcan. Hegger would not disclose the price. The CDC agreed to provide accommodation and transport for labour during construction and will ensure electricity and water supply. Alcan has already secured a 25-year power supply agreement with Eskom for about 1 300 megawatts. The project is contingent on the front-end engineering design being completed. Valdmanis said almost 100 engineers were working on the design, which would take up to a year to complete. This design would determine the equipment specifications and enable Alcan to start placing orders. Construction of the smelter could start in the third quarter of next year. The first phase, which will have a 360 000 ton annual capacity, would be completed in the fourth quarter of 2010. The second phase, which will double capacity, was due to be completed in 2013.