Rio secures Cameroon power deal

Rio Tinto's aluminium unit in Cameroon had secured a 30-year power supply contract with the government but electricity costs had doubled and smelter output would fall due to cuts in power consumption, the group said last week. Rio Tinto Alcan partners Cameroon's government in Alucam, an aluminium smelting operation that has slashed output by 40 percent from its 90 000 ton capacity this year on power shortages. "The new contract will last 30 years and Alucam will now pay 12.94 CFA francs (R0.21) per kilowatt of electricity, up from about 6 CFA francs for the previous one," Cameroon's Finance Minister Lazarre Essimi Meny said on Friday. "On paper, the price increase seems to be too much, but in reality it is just within international norms," he added. State power firm AES-Sonel would raise power supply to Alucam to 250MW in 2012 when the Kribi gas-fired power plant started and to 490MW in 2013, when other power plants came on line. But in the meantime, Alucam has agreed to slash its power consumption from current levels of between 140MW and 120MW so Cameroon can avoid power cuts and satisfy energy demand, which is growing at 8 percent a year. "Going by the present arrangement, we'll further reduce our electricity consumption to about 100MW in 2010 and 2011," said Alucam spokesman Arnold Mouangue. "(This) means our output, which already dropped to 63 percent (of capacity) in 2009, will fall again to about 50 percent during the two years." Alucam and the government agreed in 2005 to swell capacity at Alucam's Edea smelter to 300 000 tons from current levels of 90 000 tons, but the plan has been delayed due to the downturn and huge power problems in Cameroon. Alucam had a turnover of 149 billion CFA francs last year. It contributes 7 percent of Cameroon's industrial output, 5 percent of export revenues and generates 3 percent of gross domestic product.