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Valco to inject $300m into economy

Saturday, Nov 07, 2009
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The Trade and Industry Minister, Ms. Hannah Tetteh, yesterday dazzled Members of Parliament with her command over the English language, and up to date information about her ministry. This resulted in the unusual few supplementary questions being posed to her, after she appeared before the House to answer a question which stood in the name of the member for Ashaiman, Alfred Agbesi, on why Valco was closed down, and whether the ministry had plans to re-open it. The Minister disclosed to the House that by the end of the first quarter of 2010, the government would be in the best position to tell Ghanaians the exact date when VALCO would commence operations. She said that the operations of VALCO would inject revenue of about $300 million into Ghana’s economy, through the VRA, power purchases, income tax/VAT, VALCO Fund, property rate, port charges, local purchases and indirect labour. Ms. Tetteh hinted that some of the benefits that the country stands to gain from the operations of the plant include massive employment generation through rapid industralisation, via the integrated aluminum industry. There would also be a significant growth in GDP, alleviation of poverty from our society, and the optimisation and use of gas from the current oil find. According to her, the factors that triggered the shutdown of the facility earlier this year, had improved considerably, as aluminium prices had recovered from a low of $1,200 a metric tonne in January, to an average of $1,947 in October 2009. She noted that the favourable rainfall patterns of 2008/2009 had seen the Volta Lake level rise, as such the low water level in the Akosombo Dam, due to drought and low rainfall, which led to insufficient electric power was no longer the case. She reiterated that the combination of a reasonably good metal price, and the improved energy outlook, puts Valco in a favourable position to restart the facility, so that Ghana can continue to reap full benefits. The eloquent Minister stated that when a factory is shut down, and the workers are made redundant, they are paid their terms of severance, as per the Collective Bargaining Agreement, and once this is done, then the employment contract between them and the company also ends. The company can exercise the option to re-engage them at a later time, but from the time of their departure from the company, the company does not have a direct obligation towards them. She explained that VALCO produces aluminium of world-class quality by electrolytic reduction of alumina to meet the entire Ghanaian (local) demand and for export. Most of the aluminium produced is converted into value-added products like billets (for the manufacture of aluminium doors and window frames), rolling ingots (for the manufacture of aero plane parts, beverage cans) and foundry ingots and sows (for the manufacture of electrical wires, roofing sheets, cooking utensils, among many others). VALCO was initially jointly-owned by Kaiser Aluminium and Chemical Corporation (KACC) – 90% and Reynolds Metal – 10%. The Aluminium Company of America (ALCOA) later acquired Reynolds’ 10% shares. In October, 2004, the Government of Ghana accepted to purchase the 90% shares of KACC. ALCOA subsequently sold its 10% shares to the Government of Ghana in June 2008. Therefore, currently, VALCO is solely owned by the Government and people of Ghana. The smelter is the direct result of the Volta River Project, which saw the construction of the Akosombo Dam. VALCO provided the economic justification for the construction of the Akosombo Hydro Electric Dam to give meaning to Dr. Kwame Nkrumah’s vision for an integrated aluminium industry and an industrialised Ghana. The VALCO smelter consists of a self-contained reduction facility that includes a private dock, raw materials storage area, carbon anode manufacturing and a value-adding metal casting facility. The reduction process is accomplished by means of five pot lines - one hundred pots per line - for a total of five hundred (500) pots. The construction of the VALCO smelter began in 1964, with the first aluminium poured in 1966. Actual commercial operations commenced in March 1967, with three pot lines in operation. The fourth pot line was constructed and put in service in 1972. The fifth and final pot line was constructed in 1977. The maximum designed capacity of the smelter is 200,000 tonnes per year, with all five lines in operation.

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