Cape Town - Rio Tinto has not given up on the Coega aluminium smelter project and could take a decision to start construction in 2011, depending on the availability of power.
This emerged on Tuesday at the Mining Indaba conference during a presentation by Rio Tinto investor relations vice-president Jean Chawapiwa-Pama, in which she said the first metal from the smelter could be produced in 2013.
That assessment stands in sharp contrast to comments on Coega made by Rio Tinto CEO Tom Albanese in June 2008, when Rio Tinto suspended work on the project.
Albanese stated he wanted cast-iron guarantees on Eskom's provision of power to the smelter, as well as concrete proof that the "build programme" was well under way in the form of seeing new power stations under construction.
Eskom at that stage was forecasting no real relief to South Africa's power crisis until about 2015.
In November, Albanese repeated his requirement that Eskom must be in a position to give "physical assurances" that the power would be available.
Asked to quantify what he meant by "physical assurances" Albanese replied: "I don't want to get definitive about this. We want to see new power stations being built. I also do not think South Africans would be happy to see whatever extra power may become available all going to one large industrial user."
Minerals and Energy Minister Buyelwa Sonjica told the Mining Indaba on Tuesday morning that it would be 2018 before the country would be in a position to ensure no electricity shortages.
Asked for clarification, Charlie Lenegan, Rio Tinto Alcan vice-president for the Middle East and Africa, told Miningmx that discussions had been continuing with Eskom and other stakeholders, including the Department of Trade and Industry.
Eskom has taken some steps
These concerned conditions set by Rio Tinto before it could go ahead with Coega.
He said Eskom had indicated in late 2008 that the conditions to enable Rio Tinto to reach an "intention to proceed" on Coega could be in place by the end of 2010.
"If that happens, construction could start on the smelter during 2011 and the first metal could be produced on an optimistic timescale by the end of 2013 but, more realistically, early in 2014," Lenegan said.
He said Eskom had taken a number of steps towards meeting Rio Tinto's requirements over the guarantee of available power for the smelter.
These included starting construction on the Medupi and Kusile power stations as well as the power conservation programme. He added the global economic downturn and lower demand forecast for Eskom power were also factors.
"We will only go ahead with Coega once we are confident the power will be available," he said.
Lenegan said Coega would need 500 megawatts of power initially, rising eventually to 1 000MW.
He added that the initial $3bn estimate on the cost of Coega would be revisited and could be reduced because of the impact of the global economic crisis.
Lenegan said Rio Tinto's financial position - it had committed to selling various assets to reduce its debt levels - would not be a factor in the decision to build Coega, because construction would not start until 2011.
- Miningmx.com
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