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South Africa: BHP Billiton Signs Congo Smelter Deal
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Business Day (Johannesburg)
23 October 2007
Posted to the web 23 October 2007
Charlotte Mathews
Johannesburg
GLOBAL resources group BHP Billiton had signed an agreement with the Democratic Republic of Congo to investigate building an aluminium smelter in the country at a cost of about $3bn, it said yesterday.
The group had also agreed to pay for a prefeasibility study into building a third hydropower station at Inga on the Congo River, which will help supply electricity for the smelter.
BHP Billiton SA said the proposed smelter would produce about 800000 tons of aluminium a year in its first phase and require 2000MW of electricity.
But sources in the regional electricity industry said that the deal was curious because there were already existing agreements in place with other parties and it raised questions about the Congo government's transparency.
The Congo government had already signed an agreement with Western Power Corridor Company, which was established by the power utilities of the Congo, SA, Namibia, Angola and Botswana, in order to study the viability of building a 3500MW hydropower station at Inga 3, which would supply the five countries with power, as well as a transmission line.
Other global resources companies were also known to be interested in building aluminium smelters in the Congo and might question the exclusive agreement with Billiton.
The World Bank last year called for interested parties to undertake a study into Inga III .
BHP Billiton communications head Bronwyn Wilkinson could not be reached for comment.
There is a public-private partnership under way that includes Toronto Stock Exchange-listed Mag Industries and SA's Industrial Development Corporation to rehabilitate the Congo's Inga I and II hydropower plants, which were built in the late 1960s and have a total capacity of about 1700MW.
In the long term there have been discussions about building a massive power station on the Congo River, Grande Inga, which could generate 39000MW of electricity to supply southern Africa's growing needs.
Billiton said that the group's Mozal project in Mozambique had demonstrated the benefits that an aluminium smelter could bring to the country.
BHP Billiton Southern Africa chairman Vincent Maphai said that the development of the Inga III hydropower project and the smelter would be demanding.
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However, the group was prepared to work with the Congo's government to ensure the success of both projects, he said.
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