Vale, Alcoa Weigh Colombia Aluminum Plant on Prices (Update1)

Nov. 26 (Bloomberg) -- Vale SA and Alcoa Inc. may build aluminum smelters in Colombia, requiring investments of more than $2 billion per plant, once prices for the lightweight metal rebound, Energy and Mining Minister Hernan Martinez said. The smelters would be Colombia’s first and could be located on the Atlantic coast, Martinez said yesterday in an interview in Bogota. Vale, the world’s largest iron-ore miner, and Alcoa, the top U.S. aluminum producer, may be “waiting” for prices to gain before resuscitating plans, he said. Colombian President Alvaro Uribe has sought to lure foreign investment in metals refining, mines and oil since quelling guerilla attacks during the past 7 years in office. Colombia is seeking to attract investment in mines and smelters through offering inexpensive power supplies, according to Rupert Stebbings, head of research at brokerage Interbolsa SA. “Energy is everything for Colombia in the future,” Stebbings said today in a telephone interview from Medellin. “It will be an export driver for a long time.” The Mining & Energy Ministry expects companies to spend $48.3 billion on oil, mining and electricity between 2010 and 2015. New electricity plants in Colombia could help power projects to smelt imported alumina by Vale and Alcoa, Martinez said yesterday in a speech in Bogota. Vale said in January 2008 that its board hadn’t yet decided on any aluminum project in the country, which would need competitive energy supplies. Colombian hydroelectric power plants have cheaper production costs than fuel-powered generators, Stebbings said. A spokeswoman for Rio de Janeiro-based Vale, who said she can’t be identified because of company policy, and Alcoa spokesman Kevin Lowery declined to comment. Aluminum for three-month delivery has rallied 33 percent this year on the London Metal Exchange. The rebound has lagged behind other metals including lead and copper, which have more than doubled.