Identifier
Created
Classification
Origin
05ACCRA190
2005-01-27 16:58:00
UNCLASSIFIED
Embassy Accra
Cable title:  

VALCO REBORN: ALCOA SIGNS MOU WITH GHANA GOVERNMENT

Tags:  ECON EINV EMIN ENRG GH EXIM OPIC 
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UNCLAS ACCRA 000190 

SIPDIS

DEPT PLEASE PASS COMMERCE FOR RASHIDA PETERSEN
TRESURY FOR ALEX SEVERENS
OPIC FOR CONAL DUFFY

E.O. 12958: N/A
TAGS: ECON EINV EMIN ENRG GH EXIM OPIC
SUBJECT: VALCO REBORN: ALCOA SIGNS MOU WITH GHANA GOVERNMENT

REF: 03 ACCRA 02527

UNCLAS ACCRA 000190

SIPDIS

DEPT PLEASE PASS COMMERCE FOR RASHIDA PETERSEN
TRESURY FOR ALEX SEVERENS
OPIC FOR CONAL DUFFY

E.O. 12958: N/A
TAGS: ECON EINV EMIN ENRG GH EXIM OPIC
SUBJECT: VALCO REBORN: ALCOA SIGNS MOU WITH GHANA GOVERNMENT

REF: 03 ACCRA 02527


1. (SBU) On January 26, Alcoa signed an MOU with the GOG
giving it the exclusive right to assess the feasibility of
creating an integrated aluminum industry in Ghana which could
pave the way for a USD 600 million investment. If both
parties agree on the economic feasibility of the project
after 90 days, Alcoa will spend the following 12 months in
the field, assessing a plan that includes the construction of
two bauxite mines, a railroad, a refinery, and significant
upgrades to the VALCO smelter (reftel). Alcoa Director Randy
Phillips told EconOff the deal also calls for the partial
restart of the Volta River Aluminum Company (VALCO) smelter,
which could be in operation as soon as May, 2005. Alcoa,
which already owns 10 percent of VALCO, will provide
management, raw alumina, and possibly a shareholder loan to
the GoG to cover operating costs until the end of the
assessment period. If the feasibility study goes well the
final investment will exceed USD 1 billion, with ownership
split 60-40 between Alcoa and the GOG, respectively.


2. (SBU) Comment: Alcoa adopted the strategy of gradual
commitment after studying the difficult experiences of other
investors, including VALCO's previous owner, Kaiser Aluminum.
The idea of an integrated aluminum industry is widely
considered a legacy of Ghana's late President and Founding
Father, Kwame Nkrumah. Former VALCO director Dr. Charles
Mensah, who helped broker the MOU, has told EconOff on
several occasions that President Kufuor intends to fulfill
Nkrumah's dream before he leaves office at the end of his
second term in 2008. Alcoa's graduated approach should
enable a smooth separation if the realities of the balance
sheet fall short of the vision of the President. End
Comment.
YATES