An inter-ministerial committee has selected a consortium of investors to partner the state to inject $600 million into the Volta Aluminium Company (VALCO) to give the state-owned enterprise a new lease of life.
The Chief Executive Officer (CEO) of the Ghana Integrated Aluminium Development Corporation (GIADEC), Reindorf Twumasi Ankrah, who made this known in Accra at the weekend, said the 12-member inter-ministerial committee, made up of representatives from the ministries of Finance, Energy, Trade and Lands and Natural Resources, as well as GIADEC and VALCO, reviewed some proposals before settling on the consortium.
At a media engagement last Saturday, Mr Ankrah said the recommendations of the committee had been approved by the GIADEC board and forwarded to the Minister of Lands and Natural Resources for Cabinet’s consideration.
He said the decision to seek a private investment for VALCO was necessitated because the government could not solely underwrite the estimated $600 million investment needed to revive the once vibrant aluminium smelter, whose setting up was a precondition for financing the Akosombo Dam in the late 1950s.
He said while some potential investors declined because it would be cheaper to build a new smelter elsewhere, the consortium expressed interest in partnering the state on local content requirements, and the strategic value of co-ownership as its justification.
Good move
Mr Ankrah explained that previous attempts to secure an investor for VALCO failed because of unresolved issues of power supply and the handling of existing stock.
The GIADEC CEO stated that, learning from that history of setbacks, the current government restarted the process with due diligence and stricter conditions that required prospective partners to present clearly outlined plans for power generation and stock retention.
Mr Ankrah added that the plan to revive VALCO went beyond the restoration of the company’s capacity to a target to expand production to at least 300,000 tonnes within 36 months.
He said such a target would require retrofitting all six production lines, many of which were obsolete after serving for more than 60 years.
Mr Ankrah dispelled allegations that the ongoing processes to revamp VALCO were an attempt to sell the company’s lands.
Again, he stressed that although VALCO was facing some challenges, there would be no job losses as steps were being taken to attract private capital.
Mr Ankrah, however, stated that further delays in attracting private capital into the operations of VALCO could have dire consequences for employees of the company.
The number of employees has shrunk from about 1,800 in the 1990s to 650 currently.
“If nothing is done immediately, VALCO will have to shut down completely, and everyone will go home,” he warned.
“This is about safeguarding jobs, sustaining a strategic industrial asset and ensuring that Ghana’s aluminium sector does not collapse,” Mr Ankrah stressed.
Misconceptions
The GIADEC CEO dispelled what he described as “persistent misconceptions about VALCO”, stressing the need for public discourse to move beyond politics and confront the economic realities.
Taking journalists down memory lane, Mr Ankrah explained that upon assuming office on March 2, 2024, he reviewed documents inherited and realised that attempts to revive VALCO dated back to at least 2019.
He added that as part of those efforts, accounting and advisory firm KPMG was commissioned to conduct a comprehensive audit and recommend viable options for restoring the smelter.
The CEO of GIADEC said: “VALCO looks impressive from the outside, but the real question is whether it is productive in reality.”
Background
VALCO was originally built with a nameplate capacity of 200,000 tonnes of aluminium per year. Currently, the company produces only about 35,000 tonnes.
Despite this sharp decline, the plant still consumes nearly the same amount of power — about 90 megawatts — rendering operations financially unsustainable.
The smelter was established following negotiations in 1964, with power supplied from the Akosombo Dam.
It began operations in 1967 as a wholly private enterprise owned by Kaiser and Reynolds.
The government did not hold any stake until 2004, when Kaiser, facing bankruptcy in the United States, sold its majority shares to the state.
Reynolds exited a few years later, leaving VALCO fully state-owned by 2008.
By 2022, the smelter had shut down entirely, with workers sent home.
Mr Ankrah stated that repeated shutdowns further undermined the company’s prospects, as restarting operations required heavy capital investment, while output capacity continued to deteriorate.
As of January last year, VALCO owed creditors, including GRIDCo, the Ghana Revenue Authority and the Tema Development Corporation, about $450 million.
Source:
www.graphic.com.gh