New bauxite mine and alumina refinery for Ghana as it buys Alcoa stake in VALCO

Published: Jun 23,2008 10:59:15


Ghana's government has bought Alcoa's stake in the inactive 200,000 tonne/year VALCO aluminium smelter and plans to relaunch the industry with a new bauxite mine and alumina refinery, a deputy minister said on Friday.

The government paid Alcoa $2 million for its 10 percent stake in VALCO, whose smelter has been shut since March 2007 due to low water levels in the Volta dam which powers it.

The deal, giving the African state full ownership of VALCO, was concluded on Thursday, the presidency said in a statement.

"The Government has proposed a concept of an integrated aluminium industry in which the country's bauxite will be mined, refined and processed to near-end or end products here in Ghana," the statement said.

Bauxite is first refined into alumina, then transformed into metal in an energy-intensive smelting process.

Deputy Energy Minister Kwame Twumasi Ampofo said the government planned a new bauxite mine and alumina refinery.

"We are about to have on stream an additional bauxite mine at Kibi ... in the next one year or so, as a vital and integral part of the industry, that would include alumina refining, aluminium production, and enhancing the railway sector."

"We have already taken some major steps on the bauxite project, which is the reason why the government decided to fully own Valco," Ampofo said.

Rio Tinto, which mines 1 million tonnes of bauxite a year from Ghana's only active bauxite operation, exports the ore directly overseas for refining.


The VALCO smelter was built in the years following the former Gold Coast's independence from Britain in 1957 and has been repeatedly shut down due to unreliable power supply from the Volta dam, one of the biggest man-made lakes in the world.

"It had quite a roller coaster ride," Alcoa spokesman Kevin Lowery said by phone from Pittsburgh in the United States.

"Electricity is on average about one third of the cost of making aluminium across the whole industry ... when it comes to electricity you need three things: long-term, reliable, globally competitive power ... that was the issue," he said.

VALCO Executive Chairman Charles Mensah told Reuters this week there was "no news" on when the smelter might reopen.

But Ampofo said the government planned to restart VALCO within the next year or so using a combination of power from Lake Volta's Akasombo hydropower station and thermic energy fired by Nigerian gas from the planned West Africa Gas Pipeline.

The cross-border pipeline's opening has been repeatedly delayed and is now expected in the next couple of months.

"Currently, the government's energy plans should be able to give us enough power in the coming years so we wouldn't have to go through what happened to us in 2006," he said. That year saw some of the most acute power shortages in Ghana's history.

VALCO would smelt imported alumina, as it did previously, until the bauxite mine and refinery were ready, he said.

The smelter would be refitted to achieve optimum output, he said. "Some work will soon begin in the next few days."

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