Eskom to review Coega deal

LONDON - Rio Tinto's planned aluminium smelter in Coega, near Port Elizabeth, is progressing despite the power crisis, the company said yesterday.

LONDON - Rio Tinto's planned aluminium smelter in Coega, near Port Elizabeth, is progressing despite the power crisis, the company said yesterday.

"The project [is] going ahead on schedule," said spokesman Nick Cobban.

The project, due to produce 72000 tons of aluminium a year, will go to Rio Tinto's board for final approval towards midyear, he said.

Alcan, which Rio Tinto acquired last year, reached a long-term power supply agreement with Eskom in November 2006.

An Eskom official said last week that it needed to review its supply deal with the Coega project. The Financial Times in London quoted a Rio Tinto official on Tuesday as saying the company would review plans for the Coega investment.

"Questions could be asked about the wisdom of allocating the equivalent of almost half a new power station to provide subsidised electricity to a new aluminium smelter that creates limited numbers of jobs and where the profits are exported," the JP Morgan Investment Bank said in a research note on Friday. - Reuters

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